POST

MODERN
ECONOMICS

TEXT TO CONTEXT

PROF.H.MUJEEB RAHMAN
Postmodern Economics – Introduction

The following quotations by Rorty and Ruccio and Amariglio illustrate one of the
hurdles to understanding Postmodern economics—a lack of consensus among
Postmodernists:

“It is possible to choose (and to persuade others of the advantages of)

socialism over capitalism.”
(David F. Ruccio and Jack Amariglio)1

“Just about the only constructive suggestion Marx made, the abolition of
private property, has been tried. It did not work."
(Richard Rorty)2
Another hurdle is that Postmodernists tend not to use traditional language
associated with economics—wages, pensions, interest rates, inflation, Social
Security, retirement, etc. Instead, they use obscure words and phrases such as
fragmentation, differentiation, chronology, pastiche, anti-foundationalism, and
pluralism. More terminology that obscures meaning includes “the undecidability
of meaning, the textuality of discursivity of knowledge, the inconceivability of
pure ‘presence,’ the irrelevance of intention, the insuperability of authenticity,
the impossibility of representation, the celebration of play, difference, plurality,
chance, inconsequence, and marginality.”3 Confusion even surrounds the
meaning of the word person in Postmodern economic terms. Postmodern
economists Ruccio and Amariglio, authors of Postmodern Moments in Modern
Economics, explain, “The Postmodern condition opens up a very different
research agenda for economic scientists should they choose to disown (what
many regard as a necessary fiction) the unified self and move, instead to a fiction
supposedly more in tune with contemporary reality, the decentered self.”4

Ruccio and Amariglio expose the heart of Postmodern economics—and to

understand them, we must define unified self and decentered self and why they
are said to be fictions.

Postmodern Economics – The Basic Economic Unit: “The Decentered Self”

Economics flows from our understanding of the human person. Postmodern
psychology sees human beings as fictions—meaning there is no unified, rational
self and no permanent understanding of who we are. Rather, what we call human
beings Postmodernists call social constructions.

Ruccio and Amariglio say there is “no singular and unique ‘I.’”5 In other words,
there is no self-identity and no permanent soul or mind. Postmodernists refer to
human beings not as persons, but as subjects, bodies, or units. Person suggests
the existence of a singular and unique I who possesses a personality or human
nature. To Postmodernists, there is no human nature. There is only an ever
evolving, highly sexual, social animal with multiple subjective interests crying out
for recognition and acceptance. Ruccio and Amariglio admit they have “no
interest in determining or representing what the body [subject] ‘really’ looks
like.”6

Our common understanding of self corresponds to our perception of gender and

sex. However, in the Postmodern view, these two terms are not synonymous.
Being born with a male or female anatomy thus does not make us male or female
because these concepts are socially constructed fictions. Ruccio and Amaraglio
say, “Regardless of biological sex,” human beings can be “gendered in different
ways.”7 Thus, according to the Postmodernist way of seeing things, there are no
longer only two sexes—male and female–but a multiplicity of genders, including,
but not limited to, heterosexual, homosexual, bi-sexual, trans-sexual, etc. All
sexualities are socially and economically constructed and must be considered in
any emerging economic theory and practice.8

One of the major goals of Postmodern economics is to eliminate the distinction

between men and women, a distinction that has been “inculcated by an
oppressive patriarchal society.”9 The goal is to eliminate patriarchal society itself
and elevate the economic realities of gendered subjects (women, homosexuals,
bisexuals, etc.). The goal includes creating more equitable work environments for
all subjects in fields that are viewed to be presently monopolized by heterosexual
males—the military and the clergy, for example.

Postmodern economics is built on several interlocking concepts. First, every

subject’s perception of self is shaped by the surrounding culture. Second, these
perceptions are fictions in the sense that they are stories we have been told by
our society. Third, these stories do not correspond to anything objective or
eternal, and they vary from culture to culture and over time.
Postmodern Economics – Socialism vs. Capitalism

Building on the conviction that human units are interchangeable, Postmodernists

critique our understanding of gender in Western culture as oppressive and
outmoded. Historically, Western economic systems were based on a male-
dominated society. Men are said to have had an upper hand because they
constructed society and its corresponding economic structure to their advantage.
Therefore, in order to create a society with equal opportunities for all subjects,
this male-dominated system must be dismantled. Since men will not willingly
relinquish their economic power to women and the poor, the government must
intervene to see that economic justice is available to all. Socialism, or a state-
planned economy, is such an intervention.

Postmodernists thus denounce male-dominated capitalism because it produces

“one-sided” individuals who lack the ability to perceive the whole. Socialism, by
contrast, “allows potentially all of its members to see the whole.”10 In other
words, capitalism speaks primarily to heterosexual maleness, while socialism
speaks to the “total” decentered subjects of numerous genders with its “many
different subjectivities simultaneously none of which is given privilege as
representing the subject’s real essence, whether natural or historical . . . and
without a goal or end to which they are moving.”11

Some Postmodernists prefer to replace the term socialism with everyday

economics.12 An older term is collectivism. Whatever name is used, there is a
consistent denunciation of capitalism, while Postmodernists criticize in several
ways: 1) “profits seem to have a higher priority than people; 2) stress on workers
is grueling; and 3) U.S. citizens are being fleeced by banks and pharmaceutical
companies and utilities and energy companies and HMOs and big, international
companies in general [numbers added].”13

Stephen Hicks provides perspective to the Postmodern view of economics:

“Postmodern thinkers inherit an intellectual tradition that has seen the defeat of
all of its major hopes, but there was always socialism. As bad as the philosophical
universe became in metaphysics, epistemology, and the study of human nature,
there was still the vision of an ethical and political order that would transcend
everything and create the beautiful collectivist society.”14
Postmodern Economics – Conclusion
Postmodern economics is a mixed bag of conflicting ideas and theories. While
most Postmodernists favor socialism, others opt for some milder form of
interventionism. Still others harshly critique both socialism and capitalism, and
some are critical of all economic theories.

In the final analysis, while Postmodernists are not in total agreement in every
detail, they are committed to the leftist side of the economic spectrum, favoring,
to varying degrees, some form of government intervention. This intervention may
be more overt, as with Ruccio and Amariglio, or less so, as with Rorty. But in
either case, there is agreement that capitalism is the enemy of social justice. Yet
based on the Postmodern aversion to metanarratives, most hesitate to offer
concrete solutions, preferring instead to experiment with some degree of
socialism for an economic alternative that best suites an ever-changing social
structure.

1
David F. Ruccio and Jack Amariglio, Postmodern Moments in Modern Economics
(Princeton, NJ: Princeton University Press, 2003), 299.
2
Richard Rorty, Philosophy and Social Hope (New York, NY: Penguin Books, 1999),
214.
3
Ruccio and Amariglio, Postmodern Moments in Modern Economics, 17–8.
4
Ibid., 14.
5
Ibid., 167.
6
Ibid., 134.
7
Ibid., 169.
8
Ibid., 129.
9
The Washington Times, April 21, 2005, A2.
10
Ruccio and Amariglio, Postmodern Moments in Modern Economics, 250.
11
Ibid., 249.
12
Ibid., 270.
13
Ibid., 269.
14
Stephen R.C. Hicks, Explaining Postmodernism: Skepticism and Socialism from
Rousseau to Foucault (Tempe, AZ: Scholargy Publishing, 2004), 197.
Interventionism over Socialism

While many Postmodernists advocate a whole-hearted socialist agenda, others

are critical of how socialism has been implemented in the past. Some Postmodern
theorists go so far as to claim that Postmodernism is “fueled by the failure of
Marxian-inspired State socialism.”1 In this regard, Mills writes that Foucault
reacted against “. . . the purely economic and State-centered focus [of socialism
and nationalism] . . . stressing that power needs to be reconceptualized and the
role of the State, and the function of the economic, need a radical revisioning.”2
Toward the end of his life, Foucault even began encouraging his students to read
“libertarian authors on the right like Friedrich A. Hayek and Ludwig von Mises.”3

Richard Rorty looked at the history of socialism and came to the conclusion that,
practically speaking, it was a failure. Rorty writes, “Just about the only
constructive suggestion Marx made, the abolition of private property, has been
tried. It did not work.”4

Postmodern Economics – The Interventionist Approach

While the utopian promise of socialism has much emotional appeal, the actual
results where socialism has been implemented were increased poverty and
greater class division, in addition to the millions of citizens slaughtered in the
attempt to maintain a state-run monopoly. Rorty criticizes socialism and offers an
alternative. He writes, “Most people on my side of this . . . cultural war have given
up on socialism in light of the history of nationalization enterprises and central
planning in Central and Eastern Europe. We are willing to grant that welfare-state
capitalism is the best we can hope for. Most of us who were brought up
Trotskyite now feel forced to admit that Lenin and Trotsky did more harm than
good.”5

Rorty is suggesting that an interventionist approach to economics works best.

Interventionism is not a totally state-planned economy or a completely free
market economy, but a combination of the two, where the state plays a role in
redistributing wealth created in a partially or mostly free market environment.
Rorty refers to this as welfare-state capitalism.

While most Postmodernists repudiate any references to purpose or goals, Rorty is

different. He believes that economic theory should have the goal of alleviating
human suffering. Rorty is so committed to this goal that he calls it the
“transcultural imperative.”6 He sees an interventionist economy as the best way
to decrease human suffering. As he told a college audience in 1999, “The non-
West has a lot of justified complaints to make about the West, but it does owe a
lot to Western ingenuity. The West is good at coming up with devices for
lessening human suffering . . . These devices are used to prevent the strong from
having their way with the weak and, thereby, to prevent the weak from suffering
as much as they would have otherwise.”7

Notes:

1
Anthony Thomson, “Post-Modernism and Social Justice,” citing Stuart Henry and
Dragan Milovanovic, Constitutive Criminology: Beyond Postmodernism (London,
UK: Sage, 1996), 4. Available online at
http://ace.acadiau.ca/soci/agt/constitutivecrim.htm.
2
Robert Eaglestone, ed., Routledge Critical Thinkers (New York, NY: Routledge,
2003), 15
3
Mark Lilla, The Reckless Mind: Intellectuals in Politics (New York, NY: New York
Review Books, 2001), 153. Foucault’s biographer, Didier Eribon, wrote, Foucault
“had been seen with an iron rod in his hands, ready to do battle with militant
Communists; he had been seen throwing rocks at the police.” See Eribon’s Michel
Foucault (Cambridge, MA: Harvard University Press, 1992), 209.
4
Rorty, Philosophy and Social Hope, 214.
5
Richard Rorty, “Trotsky and Wild Orchids,” in Wild Orchids and Trotsky:
Messages from American Universities, ed., Mark Edmundson (New York, NY:
Penguin Books, 1993), 47.
6
Ibid.
7
Richard Rorty, “The Communitarian Impulse,” http:// Of all the areas of
contemporary thought, economics seems the most resistant to the destabilizing
effects of postmodernism. Yet, David Ruccio and Jack Amariglio argue that one
can detect, within the diverse schools of thought that comprise the discipline of
economics, "moments" that defy the modernist ideas to which many economists
and methodologists remain wedded. This is the first book to document the
existence and to explore the implications of the postmodern moments in modern
economics.
Ruccio and Amariglio begin with a powerful argument for the general relevance of
postmodernism to contemporary economic thought. They then conduct a series
of case studies in six key areas of economics. From the idea of the "multiple self"
and notions of uncertainty and information, through market anomalies and
competing concepts of value, to analytical distinctions based on gender and
academic standing, economics is revealed as defying the modernist frame of a
singular science. The authors conclude by showing how economic theory would
change if the postmodern elements were allowed to flourish.

A work of daring analysis sure to be vigorously debated, Postmodern Moments in

Modern Economics is both accessible and relevant to all readers concerned about
the modernist straightjacket that has been imposed on the way economics is
thought about and practiced in the world today.

Review:

"No other treatment of economics and postmodernism, including those written

by the same authors, is as good as this one. The first chapter, which introduces
postmodernism and constructs a genealogy of postmodernism in economics, is
excellent. The last chapter . . . is a great addition because it challenges the notion
that the economics expert has an unqualified 'better' understanding of the
economy that the person on the street."--Choice

Endorsements:

"Economics and postmodernism?! Yes: and so it should be. If 'postmodernism' is

taken to mean in economics, 'something beyond Samuelsonianism c. 1948,' then
the field certainly needs a big dose of it. Ruccio and Amariglio are Marxists, but I
am inclined to forgive them this peculiarity (and anyway they do it in a very
rethinking--Marxism way), since they write like angels and think like angels, too.
This is the real thing. Bringing economics--kicking and screaming--into the twenty-
first century."--Deirdre N. McCloskey, author of The Secret Sins of Economics

"This is an excellent and important book. All of the chapters are very good, but
the first chapter is truly outstanding. It is the best discussion of 'postmodernism in
economics' anywhere in the literature."--D. Wade Hands, author of Reflection
without Rules
"Forthright, concisely argued, engaging, and provocative, this book provides a
critical commentary on the appearance of postmodern ideas in economic
thought. But it is much more besides. There is currently no other text that brings
together the material assembled here and that lends it coherence, while also
pointing to the research agenda inscribed within it. The authors provide an
informed guide to past and recent developments in the economic literature, but
they also reveal a terrain littered with neglected challenges and unrealized but
potentially productive projects."--Judith Mehta, Open University, United Kingdom

Table of Contents:

Preface xi
Acknowledgments xvii
Chapter One
An Introduction to Postmodernism, for Economics 1
Chapter Two
Knowledge, Uncertainty, and Keynesian Economics 55
Chapter Three
The Body and Neoclassical Economics 92
Chapter Four
Feminist Economics: (Re)Gendering Knowledge and Subjectivity 137
Chapter Five
Values and Institutional Economics 171
Chapter Six
Capitalism, Socialism, and Marxian Economics 216
Chapter Seven
Academic and Everyday Economic Knowledges 252
Appendix 283
Appendix B 285
Appendix C 287
Chapter Eight
Economic Fragments 289
References 301
Index 333

www.coloradocollege.edu/academics/anniversary/Tran¬scripts/RortyTXT.htm.
Postmodern Economics – The Need for Experimentation

Some Postmodernists believe Richard Rorty’s view of Postmodern economics is

too optimistic. They are convinced that every economic system to date has failed
in one way or another. Iain Grant writes, “. . . if the tools of the past—Marxism,
the Enlightenment project, market liberalism and so on—have been tried and
found wanting, then [as Lyotard suggested] experiment is demanded.”1 Here,
Postmodernists acknowledge that all economic theories have failed, and
therefore the best we can do is keep experimenting as we go. Maybe, by chance,
we will invent some new economic idea that will better serve the people. Yet
Postmodernists offer no concrete alternative to build upon. Epstein observes
correctly that “one reason that Postmodernism has taken hold so widely is that it
is much easier to be critical than to present a positive vision.”2

Postmodern Economics – The Postmodern Dilemma

Even Ruccio and Amariglio seem to have low expectations of Postmodern
everyday economics. They say, “We don’t envision (or for that matter, seek to
promote) a separate Postmodern economic theory.”3 In fact, they are “hesitant to
argue that Postmodernism shows the way forward,”4 and are content with
conversations and encounters “rather than a new [economic] home.” Since there
is no truth about the real world or the nature of humanity, it is hard to arrive at a
correct view of economics. Such is the Postmodern dilemma.

Notes:

1
Stuart Sim, ed., The Routledge Companion to Postmodernism (London, UK:
Routledge, 2004), 40.
2
Barbara Epstein, “Postmodernism and the Left,” New Politics vol. 6, no. 2 (new
series), whole no. 22 (Winter 1997). Available online at
http://www.wpunj.edu/~newpol/issue22/epstei22.htm.
3
Ruccio and Amariglio, Postmodern Moments in Modern Economics, 295.
4
Ibid., 299.
Issues in Postmodern Economics

I. A Theory of Knowledge Value Evolution Over Time

The question of knowledge value theory needs to be placed in the context

of the history of the evolution of economies. Economics is about the
quantification of value. Economics and astronomy were the first domains of the
application of mathematics to practical affairs. They preceded the application of
mathematics to physics, chemistry, and the other natural sciences that enabled
the Industrial Revolution.

However, the physics envy characteristic of many of the social sciences has
led modern economists to complicate the mathematics that are necessary to
analyze economic systems per se. Economic systems are essentially accounting
systems, and the unit of account is what we conventionally call “money.”
Economics involves mapping the absolute quantification of value in accounting
systems onto maps of social and natural ecologies. It is in mapping the structure
and dynamics of these ecologies that higher mathematics becomes useful.

A theory of value, which is needed in order to define the specific domain of

knowledge value, requires a theory of human needs and desires. The most widely
accepted such theory in use today is Abraham Maslow’s hierarchy of needs:

 Basic physiological needs

 Safety and security needs
 Need for love and belongingness
 Need for esteem and self-esteem
 Need for self-actualization (including higher needs such as for truth, beauty,
and justice)

An ecological assessment of these levels of human needs reveals that the lower
levels require the exploitation of natural resources, while the satisfaction of the
higher needs is entirely a function of human relationships. (Maslow distinguished
between deficiency needs and being needs.) Thus the economics of lower need
satisfaction is based on the formula:

Standard of living = knowledge (technology) + natural resources

The formula for the satisfaction of higher needs is

Quality of life = Values (ethics) + knowledge (systems sciences) + choice

(political will)

The first formula in amenable to the manipulations of conventional market or

neoliberal economics, while the latter is not. Since many of the satisfiers of the
higher needs are public goods (mostly public services), we find ourselves today in
the same quandary that John Kenneth Galbraith defined in The Affluent Society
(Boston: Houghton Mifflin, 1958). in the 1950s: We live in a society awash in
private goods and starved for public goods.

“Value” is essentially in the eye of the beholder. The key to understanding

the historical shift from the Industrial Era to the Information/Communications Era
is the shift from an emphasis on the economics of Standard of Living to an
emphasis on the economics of Quality of Life. Quality of life is mainly dependent
on human services and human relationships. This signifies a major shift in the
perspective from which we must address the question of value. Since our
standard of living is mainly a function of our ability to utilize natural resources in
order to create useful things (commodities or products) the criteria for progress
and productivity are essentially objective. In other words, most informed
observers can agree on measurement criteria.

When it comes to human services and relationships, however, agreeing on

criteria becomes much more problematic. The criteria become intersubjective.
This means they require agreement or consensus among persons (subjects) who
may be coming from widely divergent points of view about values. These
differences may be relatively modest, based on differences of temperament and
personal history. Or they may be yawning chasms grounded in ideology or
cultural identity and worldview. In either case, ‘values’ is not a trivial variable in
the Quality of Life equation. Values cannot be taken for granted. On the
contrary, in the absence of a viable living tradition, they can only be established
through negotiation. This means politics. Ideally, political negotiation can best be
accomplished in the context of intersubjective empathy and compassion (both of
which are herewith proffered as desirable values). But it cannot be denied as an
empirical fact that negotiations are often resolved by force.
 Human services and relationships essentially live in virtual space, not in
geographical space, although in many cases geographic proximity is necessary to
establish functional intersubjectivity. The information/communication
technology (ICT) revolution has enormously expanded the human capacity for
creating knowledge in virtual space. The challenge is to adequately map our
accounting systems onto this new greatly expanded virtual geography. An
optimistic view of the potential of this horizon is offered by the normally more
pessimistic, or at least more skeptical, philosopher José Ortega y Gasset.
According to Ortega, humans turn inward into the self in order to reflect on
possibilities for intellectual and technological progress. However, this inwardness
is always prelude to action.

Far from losing his own self in this return to the world, he carries it thither,
projects it energetically and masterfully upon things, in other words he
forces the other–the world–little by little to become himself. Man
humanizes the world, injects it, impregnates it with his own ideal
substance, and it is possible to imagine that one day or another, in the far
depths of time, this terrible outer world will become so saturated with man
that our descendants will be able to travel through it today as we mentally
travel through our own inner selves; it is possible to imagine that the world,
without ceasing to be the world, will one day be changed into something
like a materialized soul, and, as in Shakespeare’s Tempest, the winds will
blow at the bidding of Ariel, the elf of Ideas. Man and People (New York:
Norton, 1957, pp. 20-21, Original italics; he hastens to add in a footnote: “I
do not say this is certain. . .but I do say that it is possible”).

A sea change in the transition from the Industrial Era to the

Information/Communications Era has been the shift from the centrality of the
idea of “progress” to the idea of “sustainability” in public discourse. In the
nineteenth and most of the twentieth centuries, it was assumed that change
driven by science and technology, by capitalism, and by democratic politics
represented improvement. Ortega argues that the soporific effect of this idea lay
behind much of the pain and destruction of the twentieth century:

No small part of the anguish that is today [the mid 20th century] tormenting
the souls of the West derives from the fact that during the past century–
and perhaps for the first time in history–man reached the point of believing
himself secure. …The progressivist idea consists in affirming that humanity–
 an abstract, irresponsible, nonexistent entity invented at the time–
progresses, which is certain, but also that it progresses of necessity. (Op.
Cit., p. 26)

However, toward the end of the century, the concept of “sustainability”

began to gather currency. Today it is an international buzzword in politics and
planning. The practical and economic significance of this concept is that we must
now make conscious choices–political decisions–about those aspects of social and
natural ecologies we want to maintain, as well as about those we want to change.
This underscores the importance of conversations about values and ethics in civic
life. Nostalgic fundamentalism–religious (Christian or Islamic), economic (free
market fundamentalism), or political (dogmatic democracy)– is no longer a
sufficient foundation for ethical decision making in a globalizing world. On the
contrary, it is incumbent on leaders in all areas of society, ranging from education
and health care to politics and business, to encourage both greater understanding
of the character of complex social and natural systems and of the ethical issues
involved in the planning and management of those complex systems.

II. Investing in Third World Economies

I was recently challenged by a colleague to explore this question: How can

an investor (that is, a holder of assets, of accumulated savings) realize a
reasonable return on the kinds of investments that are needed for Third World
development?

The answer to this question requires that we establish some basic theoretical
principles:

 Money is an agreement to use a unit of account in an accounting system

(This includes both the medium of exchange and the store of value
functions of money.)
 An economy is a nested network of accounting systems mapping nested
social and natural ecologies

The under these principles, the key policy necessity is to have sustainable
accounting rules that:

1. Replace interest with service charge

 2. Minimize paper entrepreneurialism

The basic systems unit of economics should be the sector. Sectors can be
nested with regional metasystems (e.g. metropolitan bioregion, national
economy, etc.) Important sectors include: agriculture, health care, education and
culture, manufacturing, natural resource management, recreation and
entertainment, transportation, public safety. Each of these sectors is an ecology
that operates according to distinctive system dynamics that deserve intelligently
designed accounting systems. The role of the banking system should be both to
recognize these distinctive ecologies and to design metasystems that coordinate
exchange, savings and investment among these ecologies. The following tables
off two templates for assessing the economic issues in sectors:

“Market” Accounting System

Production for Individual Conventional Market Economics
Consumption
Production for Collective Separate consumption and
Consumption investment accounts for the public
sector (including NGOs),
income=taxes & philanthropy

Core Issues Solution Public Sector Add-On

Underutilized Complementary Political Will
Productivity Currencies
Low Productivity Investment Political Will

As a general rule of thumb, philanthropy is better suited to fund public

investment and government to fund public consumption, although some
investment projects are so large that government investment is required, e.g. the
railroads in the 19th century, space exploration, and basic research in general.

The role of government (the legislative function) should be to establish

ground rules for the economy as a system (of accounting systems). Government
and civil society (the NGO sector) should have joint responsibility for determining
and prioritizing collective needs for consumption and investment.

Organizations that provide public services and implement public

investments (public sector entrepreneurs) can be chartered as government, NGO,
or private corporations. Privatization policies should distinguish between
organizations that are essentially providing public services that require public
subsidy and/or oversight and those that are public assets (that is, that generate
resources for public purposes, e.g. public ownership of natural resources). In the
former case, regardless of the type of charter, the key requirements are
transparency and accountability. The latter case must be accounted a public give-
away, although there is room to contract for the management of public assets.

As a general rule of information economics, research that primarily

generates information or ideas should be publicly funded and the results should
be in the public domain. This is analogous to the role of government in creating
the post-Civil War land grant universities; as with higher education there is also
room for private philanthropy. However, organizations that use information in
the public domain to produce real-time goods and services are assets that can be
owned by any combination of individual, corporate, or public investors.
Ownership of productive assets using public domain information is a viable
alternative to extending patent protection. Productive enterprises include
enterprises whose main function is accounting services.

The democratization of the capitalist economy is necessary for broadening

the base of stakeholdership and reducing incentives for collective antisocial
activity, such as rebellion or terrorism. The democratization of capitalism
requires the democratization of ownership through institutional arrangements
such as those proposed by Louis Kelso, Jeff Gates, and Shann Turnbull.

The most important sectors for investment in Third World development

systems are health care, education, and sustainable agriculture. Investing in
these systems requires collaboration among entrepreneurs, producers, and
consumers. The key to both of these sectors is mobilizing local human resources,
not importing technology or other goods. Self-financing by entrepreneurs,
producers and consumers using Kelso investment mechanisms and micro-banking
(i.e. the design of an appropriate accounting system) can reduce the need for
outside ‘foreign’ capital, which should be needed primarily to purchase materials–
especially technology– and expertise that are not available locally. Foreign liquid
capital can be provided by both government and private investors. (‘Foreign’ in
this essay refers to transactions with agents outside of the regional economy in
which the investment is taking place, not necessarily outside of national
boundaries.)

Under real wealth-based accounting systems, average return on investment

should be roughly equal to the average growth rate of the economy. Distribution
should be governed by some mix of traditional capitalist and Kelso investment
mechanisms. However, the potential growth rate of services is much higher than
that of industrial era growth as the former is not subject to the same level of
natural resource (including energy) constraints as the latter.

The problem with generating a return on foreign investment is that it must

be paid by exportable real wealth. In economies with limited capacity for
material exports, the obvious alternative is tourism, including eco- and
educational tourism. Foreign investors might also consider the value of intangible
returns, such as reductions in global warming and international terrorism.

A model investment accounting system

 The foundational level of investment is investment in accounting systems

(accounting systems = technology + expertise). Additional investment
projects would be created according to regional needs involving locally
unique mixes of technology and expertise.

 Types of investor participation: Public participation by national and

regional governments. Separate consumption and investment accounts for
the public/social sector. National government invests in national currency
made available for ‘foreign’ investment. Regional government invests in
local currency. Regional stakeholder ownership (Kelso) also a major source
of investment.

 Since the primary area of growth will be the productivity of service workers,
the highest rate of return will be on regional currency and Kelso accounting
system investments.
  Since one consequence of increased productivity (one measure of growth)
should be additional leisure, that leisure can be taxed using a Time Banking
accounting system.

 Foreign investors bringing technology could lease rather than sell, thus
maintaining an ongoing stake in the growth to be realized. The growth
potential in the technology area offers modest returns on potentially huge
markets for whoever gets there first, since a working system would be
globally marketable.

 The initial foreign investors bringing expertise will be creating beta sites
that will, at least in the early stage, have substantial growth potential for
educational and eco-tourism.

III. A Modest Proposal for a Regional Network of Complementary Economic

Institutions

I would like to offer the possibility of developing a network of regional

complementary economic institutions. This is based on the notion that
economics is essentially simple in principle: it consists of mapping accounting
systems onto social and natural ecologies. Thus the math is simple: arithmetic
and simple algebra, and when you get into projecting the future, elementary
statistics and calculus. Complexity arises out of the richness and complexity of
the data to be processed. That is why computers are revolutionizing economics,
and why whole-system pilot projects are a good idea.

The logical region for a pilot project in Sonoma County is the metropolitan
bioregion of Sebastopol, which consists mainly of the city and the west county
supervisorial district, exclusive of the parts in the Santa Rosa Metropolitan area.
This aret already has much of the social and political infrastructure needed, and it
is small enough to be modeled in a reasonable time frame .

The approach would be based on the two recognized basic functions of

money: Medium of exchange and store of value (savings and investment). This
can be mapped against the two primary sectors of the economy, public and
private (although these are more accurately described as “the market” and “the
commons”; the commons includes both government and philanthropic/NGO
activities). This leads to a matrix that proposes four innovative financial
institutions:

The Market The Commons

Medium of C$D System Time Credit Bank

Exchange

Store of Solari-Type Regional Community

Investment Foundation
Value
Group

At this point he advantages of a complementary currency system are pretty

well understood among many culture creatives; it consists of creating a banking
system that substitutes a reasonable service charge for interest. The Solari model
provides for a group that is knowledgeable about both the ecology of the
community and the mechanics of economic information system management to
create an investment institution focused on ecologically sustainable real wealth
growth in the local economy. (The mutal credit model is the desirable alternative
to fiat and debt-based monetary issuing systems. For information on the Solari
model go to: http://courtskinner.com/solari/Rise.htm.) A Regional Community
Foundation can provide the benefits of a Solari for investing in and sustaining the
Commons. This would go beyond the model of the existing Community
Foundation Sonoma County in that it would focus on investing in the regional
economy, not just investing in support of the regional commons. However, the
existing Foundation might be willing and able to provide infrastructure.
 The relevance of Time Banking in the commons requires a bit more
explaining. In No More Throw-Away People Edgar Cahn documents the utility of
Time Banking for what he calls the “Core economy[:…] family neighborhood,
community and civil society” (2nd ed.; Washington, DC: Essential Books, 2004, p.
203). Lietaer and Demeulenaere’s study of Bali documents the positive results of
what is essentially a time credit tax. One of the benefits of a time credit tax is
that it is automatically progressive, requiring equal contributions to something
everyone in the short term has the same amount of: time. The disadvantage, of
course, is that implementing a tax would require a radical rethinking of tax policy.
In the meantime, much can be done with Time Banking philanthropy. This type of
activity has the advantage of taking place outside of the complexities of IRS policy

Many of the activities of government and the non-profit sector involve both
market and commons components, for example public transportation and higher
education. In these areas, user charges in C$Ds combined with tax and
philanthropic support make sense. Time Credit taxation(along with the authority
of local jurisdictions to implement progressive dollar taxation) can come later.

Postmodern Economists, Empiricist Sociologists? The Problem of Unobservables

A few days ago, I ran into one of my favorite economics PhD students at my
favorite Coffee Shoppe. When I first started meeting the economics PhD students
here at Michigan (through the first-year econometrics sequence), I was surprised
by how… normal they all seemed. They were interested in economics, but they
were not “market fundamentalists” or die-hard Hayekian libertarians. For
example, they by-and-large seemed to agree that development economics had
failed the poorer parts of the world over the last few decades, in part due to its
own hubris. We didn’t agree on everything, but we had a lot of common ground. I
began to wonder if the arrogant, imperialist economist was a myth, at least
among Michigan students (who tend to focus on labor and development, and less
so on micro-theory, for example).

Then I met this particular grad student – call her L. The first time I had a
conversation with her came during a discussion of precisely the role of economics
in development. Before class one day, she was arguing with another student that
it was important for economists not to know too much about the countries they
were working in – that it would be at best worthless and at worst outright
harmful. The job of the economist was to bring the Theory and let local experts
worry about the quirky details of the specific place. I wish I’d had a tape recorder!

When I ran into L this past week, though, our conversation was not about
development but rather the role of unobservables in theoretical and empirical
work. She was reading about factor analysis, and asked me what I thought about
it, and I replied something cheeky about economics being a shockingly
postmodern discipline* in that they were quite comfortable analyzing the world
in terms of, and coming up with measures of, unobservable quantities (the classic
example is apparently “effort” in labor studies). Sociology is not free of this habit
– and I’m not particularly opposed to it – but I think it’s interesting how crucial
unobservable concepts are to economic theory and yet how ruthlessly positivist
the rhetoric surrounding economic knowledge can be. Leave “culture” to the
lesser mortals, we economists deal with cold, hard rational money and resources.
I’m exaggerating, of course, but I think there might be a significant grain of truth
there.

A classic example of this kind of problem is Harison White’s (1981) Where Do

Markets Come From?. White rejects existing economic explanations for the
origins of stable markets as being impossible because they require actors acting
on knowledge they cannot have, e.g.“Firms can observe only volumes and
payments, not qualities or their valuations…” (p. 520) White then generates
different circumstances under which firms’ mutual observations of each other,
and knowledge of their own internal cost structures, leads to different possible
stable markets. It’s a very dense model I don’t claim to fully understand, but one
of the central distinguishing claims White makes is that he can explain markets
without reference to actors acting on unobservables.

A similar story popped up in the literature I’m currently knee-deep in concerning

the rise of agency theory and “shareholder value” as a logic/conception of
control/model of the firm/etc: the problem of profit. In an important sense, there
are two very different kinds of profit discussed in the academic and business
literature, economic profit and accounting profit. Accounting profit shows up in
balance sheets and refers to the money left over after paying expenses. It’s
observable – and manipulable, but different from what economists are talking
about. Here’s Froud et al. (2000):
“[E]conomic profit is an unobservable concept of mainly theoretical interest to
economists, whereas accounting profit is an observable magnitude of interest not
only to companies themselves but to those who make economic decisions to
contract with the firm and to those who comment on corporate performance.”
(777)

In an excellent paper in a similar vein, Espeland and Hirsch (1990) give numerous
examples of the kinds of manipulations possible of accounting profits that, they
argue, made possible the conglomerates of the 1960s. Especially popular tricks
allowed firms to count the earnings of acquired firms retroactively, thus
increasing the apparent profitability of the firm post-merger (I don’t want to
butcher the details, go look at the paper if you are curious). I’m not so interested
in overt frauds – a la Enron – as the general problem of needing to make choices
to end up with a balance sheet that lists a certain amount of profit. Even well-
intentioned accountants not trying to defraud anyone, following generally
accepted practices, make choices that in turn define the observed (accounting)
profits. And on the basis of those observed figures, business decisions are made
(by investors, executives, etc.).

So, where does this all get us? I’m not entirely sure, but I’m enjoying thinking
through these issues – how do you study decision-making? Is it reasonable to say
that (economic) sociology has focused more on the kinds of tools available to the
people making decisions while economics has focused narrowly on more abstract,
and unobservable, constructs?

Alright, back to writing.

* If I recall, Lyotard talks about game theory is a great example of a postmodern

science concerned with narratives and possible worlds.

Postmodern economics
I was chatting to an arts graduate friend recently and I threw in the phrase
“postmodern economics” and how I thought it was an important thing to
understand. This phrase provoked an amused laugh, with my friend denying that
such a thing was even possible. I didn’t follow up on this one too much, as
economics tends to scare artsy-type folk. (Though Complicates have shown that
you can even present high level maths to an arts audience and if done right,
they'll swallow it.)

So it was interesting to come across this rather fantastic New Yorker article which
manages to also talk about postmodern economics, and has a good stab at
applying Jacques Derrida to high finance. It’s great stuff for all you postmodern
economics types (ie all of you!).

Meanwhile, the New York Times takes a less theoretical (but just as postmodern)
take on mechanics and economics. It echoes some of my own ideas, which one
day I'd love to write about in more detail. In a nutshell, my theory is the credit
crunch explodes the modernist over-reliance on numbers and rigid models, so
opening the way for a postmodernist analysis to emerge. In this, Table and Kay
are already working out some patterns.

Post-Modern Applied Economics: It’s the Error Term, Stupid.

I think of economics as the one true modernist social science. Our reliance on
mathematics and mathematical models introduced a statistical and theoretical
rigor that distinguishes economics from the other social sciences. It has also
tended separate the discipline from its 18th century roots in moral philosophy and
it has reinforced our conceit that economics is more like physics than it is like
psychology or sociology.

These are not necessarily bad things. They have provided economics with what I
think is a better developed (than other social sciences, not than physics)
theoretical framework from which empirical analyses can be conducted. It has
resulted in mathematical and statistical rigor that should be the envy of all other
social sciences. However, it has also produced a remarkable uniformity of
perspective, opinion, and belief among the members of the tribe. In the last, it
has come to resemble a religion rather than a science, at least for some.

Had it not been for the recent crises in mortgage and financial markets, most of
the high priests and priestesses of our arcane religion would still be worshipping
at the alters of rational expectations, efficient markets, and Pareto efficient
equilibria; allowing a morbid fear of free-riders and moral hazard to dominate any
attempts to address social issues rationally; and chanting the mantra that
rational, fully-informed self-interest would save the day (even in situations where
information was highly asymmetrical with little hope of remedy).

Economics has been brought down by animal spirits, fat tails, and insularity.

I believe there are several things that will haul us back from the brink of
irrelevance and set us on the track to true science. The one I want to write about
today is economics becoming a legitimate social science instead of a branch of
mathematics. Deirdre McCloskey has written extensively about this. She and
Steve Ziliak have been fighting a two-person war to move the discipline to a more
enlightened approach to statistical inference for years.

I believe it’s time to refocus attention and discussion on the error term. It is often
where much of the action is in our models. It is where unexpectedly catastrophic
events dwell resulting in fat tails. It is where our animal spirits manifest and cause
us to do the right thing or the wrong thing or the thing everyone else is doing
rather than the self-interested, fully-informed rational thing. It is where God and
miracles and chance dwell.

The error term is the unexplained residual. Often it contains 70-90% of the
model’s variation. It may be reassuring to find that price and income matter and
have the expected signs, but if the explanatory power of the model is low, there is
almost certainly more we need to know before we can legitimately call ourselves
scientists.

Post-modern applied economics, macro and micro, must do a better job of

explaining the error term. It is not enough to assume a distribution, a
corresponding functional form and then present the most likely model
parameters (with 95% confidence intervals). We must investigate the error term
by conducting research on what might be left over, what might not be in the
model.
This is a well-known problem with economists: omitted-variables bias. It’s time
for us to recognize that OVB runs deeper than finding the best instrument (which
almost certainly does not exist or if it does, does not vary sufficiently both to
reduce bias AND provide precise estimates).

Ironically, psychology, sociology, and anthropology, the social science disciplines

we have looked down on these many years, have done much of this for us.
Behavioral economists are now leading the charge, but it will require more than
improved behavioral models. It will also require a new approach to statistical
inference.

What does this mean? Null-hypothesis statistical testing still has value, but its
value should be in supplementing a well-researched narrative. P-values and
arbitrary cut-points for statistical significance should be recognized for what they
are: tools for inference that must be placed in context and tempered by what else
is known about the relationships. They are not hard and fast rules that “prove”
anything. Observational data are “observed.” This means we have to “observe”
more than the variables in the model and the supposed instrument. We must
observe context, political, economic, social, and any other even when we can’t
include them adequately in the model. We should question the “independent,
identically distributed” assumption always. It is clear that independence was
highly questionable in finance and mortgage markets. Surely, there are other
examples. Finally, there are always omitted variables. In every model. They are in
the error term. They should not be ignored even if they are believed to be
uncorrelated with regressors. They may well be correlated across individuals.

The error term is and has always been where most of the interesting “action” is.
Economic research must return to rhetoric and rhetorical discourse derived from
extensive research and supplemented by a sounder approach to statistical
inference in order to investigate it. Deirdre McCloskey has said something like this
before me.

Is it a girl thing?
POSTMODERN CONSUMPTION: ARCHITECTURE, ART, AND CONSUMER
BEHAVIOR

ABSTRACT -

We live in a period of transition from modernism to postmodernism. Postmodern

elements can be traced in architecture, art, and consumer behavior.
Postmodernism is a era without a dominant ideology but with a pluralism of
styles. Social and technical changes create four dominant postmodern conditions
related to fragmentation of markets and experiences, hyperreality of products
and services, value realization later in the consumption cycle, and paradoxical
juxtapositions of opposites.

1. INTRODUCTION

'It is the emptiness that fascinates me. People collect altars, statues, paintings,
chairs, carpets, and books, and then comes a time of joyful relief and they throw
it all out like so much refuse from yesterday's dinner table'

Milan Kundera (1984)

Western societies are in a process of 'modernization' or better

'postmodernization.' According to sociological theory, three independent trends
can be observed: societal differentiation, secularization, and individualization
(Naumann and Hufner, 1985). Taken to its extreme, these trends lead to societal
fragmentation, loss of identities and social structures. These processes are not
characteristic for the modern era, as some sociologists would argue, but for
postmodernism.

It is extremely difficult to observe trends and trend disruptures of the present

period. It is much easier to overlook the past and to discern past trends and
fashions. Nevertheless, many signs tell us that we pass from the modern into the
postmodern era. The modern era was the period of industrialization, factory
workers, ideology, nationalism, and mass culture. It brought us wars and material
well-being, and sharp economic distinctions between classes and nations.

The postmodern era is the period of information, office workers, differentiated

structures, globalism, and fragmented culture. It is also the era of the 'lost
fathers'; the end of dominant ideologies. It is a time of incessant choosing. No
orthodoxy can be adopted without self-consciousness and irony. All traditions
seem to have some validity. Pluralism is both a great problem and a great
opportunity. Many persons in the West became liberated from oppressing
ideologies and became cosmopolites. Pragmatic political parties with acceptable
solutions to societal problems, such as D'66 in The Netherlands, gain voters'
shares, whereas traditional ideology-based political parties tend to lose voters'
interest.

The information explosion, the advent of organised knowledge, involves world

communication. Once a world communication system and forms of cybernetic
production have been established, they create their own necessities and they are
irreversible. Communication networks create a 'global village,' as McLuhan (1964)
used to call it.

The challenge of the postmodern person and consumer is an 'embarras de

richesses' and an 'embarras des choix', to choose among traditions, styles,
products, and services from the past and the present. Eclecticism and pragmatism
are the keywords.

The concept of postmodernism was first used by the Spanish author Federico de
Onis in 1934 and then by Arnold Toynbee in his A Study of History, written in 1938
and published after the war in 1947. For Toynbee postmodernism was a new
historical cycle with the end of western dominance, the decline of individualism,
capitalism, and Christianity, and the rise of power of non-western cultures. He
and his contemporaries were negative about this development. They criticised the
lack of a new style and ideology, and the return of former styles and traditions in
an eclectic manner.

Ihab Hassan (1980) became the self-proclaimed spokesman of postmodernism

and he tied this label to the ideas of experimentation in the arts, architecture, and
technology. For Hassan, postmodernism is 'discontinuity, indeterminancy,
immanence.'

For many philosophers, a rejection of logical positivism makes one a postmodern

thinker. For many consumer researchers, nonconventional research approaches
and alternative ways of knowing are labeled postmodern (Sherry, 1991).
Postmodernism encourages pluralism, sensitivity to differences and tolerance of
the incommensurable (Lyotard, 1984[1979]).
2. THREE WAVES

Alvin Toffler (1980) was one of the first to popularise three waves or periods in
the history of civilization: the agricultural, industrial, and informational revolution.
We are now on the edge of the third wave with its demassification or
fragmentation of production, media, styles, ideologies, and even societies.

The pre-modern period is characterised by its local and agricultural orientation.

Hunting tribes settled down and engaged in agriculture. The ruling class consisted
of kings, warlords, and priests. Most people worked in agriculture, often not
owning the land they work on. The culture was aristocratic. Ordinary people had
no time, education, and opportunity to participate in cultural events, except for
the church and local fairs (table 1).

During the modern period (circa 1450-1960) industrial production developed. In

the nineteenth century, the work became more and more concentrated in
factories, and the method became mass production under a strict division of work
and a strict separation of the capitalist owners and the working class. These
distinctions created their political ideologies of liberalism and socialism. As a
'religious ideology' Christianity kept its important role in Western society.

The modern period is a period of mass production and consumption. It is also a

period of utopism and the 'grand ideologies.' In the Western world, the ideology
of progress and welfare through material goods and the nuclear family as the
cornerstone of society is dominant. In the Communist world, the idea of the
'socialist man' and the collectivization of work, living and free time are promoted,
actually separating the parents from their children by giving their education in the
hands of specialists, and employing both parents in the development of the
socialist society.

In 1956 for the first time in the USA the number of white collar workers
outnumbered blue collar workers, and by the late seventies America had made
the shift to an information society with relatively few people (13 percent)
involved in the manufacture of goods. Most workers (60 percent) are engaged in
the 'manufacture' of information. Whereas a modern, industrialised society
depends on the mass-production of objects in a factory, the postmodern society,
to exaggerate the contrast, depends on the segmented production of ideas and
images in an office.
The transition from the modern to the postmodern period was and is not without
turbulence. During the second part of the sixties student revolts and protest, such
as in Paris in May 1968 and in other cities, were a sign of a 'cultural shift' from
materialistic to postmaterialistic values (Inglehart, 1977, 1989). Materialistic
values of the older generation emphasize the possession of material goods, law
and order, authority, a strong defense, and the fight against criminality.
Postmaterialistic values of the younger generation are related to freedom of
speech, self-expression, experiences, tolerance, and harmony. Postmaterialistic
values fit well into the postmodern world of pluralism and tolerance. The
transition from modernism to postmodernism is a gradual one: For some persons
and in some domain this shift is more prominent than for other segments and
domains. The year 1960 is thus only an indication of the time of this transition.

CHARACTERISITCS OF THE PREMODERN, MODERN AND POSTMODERN PERIODS

(JENCKS, 1987, P.47)

In the postmodern world, there is a revolutionary growth of jobs to create,

transform and disseminate information. The proletariat of factory workers is
almost replaced by the cognitariat of office workers. These workers are working,
lower nor middle class, but rather para-class. Most of them are clerks, secretaries,
teachers, students, managers, researchers, advertising people, writers,
bureaucrats, technicians, bankers, insurance people, stockbrokers, accountants,
lawyers, programmers, all handling information.

Jean-Frantois Lyotard (1984) is mostly concerned with knowledge in this scientific

age, in particular the way knowledge is legitimized through the 'grand narratives,'
such as liberation of humanity, equality, progress, the emancipation of the
proletariat, and increased power. These grand narratives, such as religion, nation-
state, and the destiny of the west, have largely become non-credible. In his
'Postmodern Condition' he states: 'The object of this study is the condition of
knowledge in the most highly developed societies. I have decided to use the word
postmodern to describe that condition ... I define postmodern as incredulity
toward meta-narratives ... Our working hypothesis is that the status of knowledge
is altered as societies enter what is known as the post-industrial age, and cultures
enter what is known as the postmodern age' (Lyotard, 1984).

First, the dominant ideologies of the modern era will be discussed with emphasis
on their relevance to postmodernism. Then, some general characteristics of the
postmodern era will be discussed especially in architecture and art. We will apply
these characteristics to consumption in a later section of this paper.

3. IDEOLOGIES

In the course of history, kings, warlords, priests, and other authorities reigned
over ordinary people. This was accepted during the pre-modern and modern eras
as a 'natural rule' in society. During the modern era, this natural rule became to
be criticised by ideologies such as liberalism, socialism, communism, anarchism,
fascism, and feminism. Except for communism and fascism, these ideologies will
be briefly discussed (Van Gennep, 1990).

Liberalism is the ideology of the free citizens, the bourgeoisie that gained power
from the nobelty and the state. The emancipation of the citizens started during
the renaissance. Liberalism is the ideology of the American revolution (1775).
Freedom, equality, and brotherhood is the credo of the French revolution (1789).
Rationalism, tolerance, abolition of slavery, constitutional government, and an
economic 'laissez faire' are the keywords. The economists Adam Smith and David
Ricardo advocated the 'invisible hand' of competition. The laws of supply and
demand will create the equilibrium of optimal benefits for both parties. Although
the abstract principles of liberalism were favorable for society, during the second
part of the nineteenth centery, liberalism degenerated into extreme capitalism
with the negative consequences for the workers. The liberal notions of freedom,
tolerance and equality of men are kept in the postmodern period.

The works of Charles Dickens, 'Les MisTrables' of Victor Hugo, and 'Das Kapital' of
Karl Marx described the conditions of the poor working class. Socialism became
the ideology of the working class, against the oppression of the capitalists. The
Communist Manifesto of Marx and Engels (1848) gave a theoretical foundation to
socialism and communism. It stated the necessity of the class struggle and
revolution. The realization of socialism and elimination of private property in
Eastern Europe brought bureaucracy, stagnation, corruption, and an oppressive
state power (Stalin). In the Western democracies it created basic social security
for the unemployed, disabled, and retired workers. In the postmodern era,
socialism tend to elicit the guilt feeling and responsibility for the poor and the
handicapped, ven for those who do not follow the socialist ideology.
Anarchism originated during the French revolution. It is opposed to hierarchy and
institutionalization. The anarchists advocate 'workers' councils' and 'sovjets' as
governing principles. Except for the Commune of Paris (1871), the Council
Republic of Munich (1919), and the Spartacus Revolt (1914-1919), anarchism did
not materialise in actually functioning governments. Proudhon and Bakoenin
were the main anarchist philosophers. From Proudhon is the famous statement:
'Property is theft.' Postmodernism inherited some anarchist ideas such as
independence and an anti-authoritarian attitude.

Feminism had its roots in Enlightenment, just as the other ideologies, is

comparable to a political ideology as it promotes equality of power of men and
women, designs strategies of liberation for women and others, and accuses the
'masculine' suppression of women and nature. In Western societies, feminism had
its second wave in the sixties. The feminist movement benefitted from the trend
to smaller households and individualization. Feminism is postmodern in the sense
that it emphasises equality, tolerance, and independence for both sexes.

To some extent, these ideologies seem to have become outdated. Some elements
are kept, such as the emphasis in the feministic and liberal ideologies on
individual and non-sexist responsibilities. Some authors claim the 'end of history'
in postmodern times and state that a dominant liberal-democratic model has
become the dominant model in Western societies. Most fascist and communist
totalitarian states collapsed and a liberal form of capitalism survived. If these
liberal democracies guarantee human rights, dignity, freedom, a certain equality,
a satisfactory consumption level and avoid military wars (but allow economic
wars), the stable situation of the 'end of history' has been reached (Fukuyama,
1992). The train does not continue any more. Let's enjoy civilization as it is. We
cannot expect significant changes in the future.

The end of ideology does not mean the end of styles. On the contrary, the
ideological freedom creates a large variety of styles and genres. First, postmodern
developments in architecture and art will be discussed. Similar developments in
literature and music will not be discussed, in order not to make this paper too
long. Then, I will try to describe the postmodern impact on advertising and
consumer behavior, as relevant for marketing and consumer policy.

4. POSTMODERNISM IN ARCHITECTURE
Modernist architectural styles are characterized by their ideology. They have a
massage to the world. The dominant idea might be minimalism, functionalism,
aestheticism, constructivism, or even elitism or dogmatism. Often, a technical
solution is given to social problems. 'Garden cities,' such as the Bijlmer in South-
East Amsterdam, are designed to separate pedestrians from car traffic, and to
create a park environment around immense apartment buildings. Modernist
architects, such as Le Corbusier, were popular in the communist countries and
were imitated by Soviet architects. Le Corbusier's largest building is the
Tsentrosojuz building, the Central Union of Consumer Cooperations at Moscow,
built in 1936. The Soviet architect Nikolaj Kuzmin, for instance, had explicit ideas
about the 'new man.' The population should be divided into age categories, and
men, women and children should be housed separately. No family life was
planned. Private rooms were not planned either; six people of the same sex living
in communities slept in sleeping rooms and met in recreation rooms. At ten in the
evening, lights would be turned off and at six in the morning, people awake to
have their communal breakfast and to go to their factory or office work. Kuzmin
even planned how many minutes were needed for exercise, shower, breakfast,
etc. The communist paradise was obviously very similar to jail. Modernist
architects were the 'executives' of the socialist ideology. Modernist style fits very
well in the collectivization and urbanization approaches, reducing the differences
between the city and the countryside, until recently employed in Ceaucescu's
Romania.

A specific style, such as De Stijl or Bauhaus, dictates their followers in their design
and restricts their freedom of designs. Pure aestheticism is a 'l'art pour l'art' in
architecture. The International Style of concrete, glass and steel is the dominating
style of the late modernism. This is still a popular style, e.g., the Nationale
Nederlanden and Unilever headquarters close to the Rotterdam Central Railway
Station. It is a rather alienating for those who live and work in these buildings.

Modernist architects and designers, such as Le Corbusier, Raymond Loewy, and

Mies van der Rohe, holds the values of 'truth to materials,' 'logical consistency,'
straightforwardness,' and 'simplicity.' Late modernist buildings, such as the Centre
Pompidou in Paris and its follower the General Library at Rotterdam,
communicate the ultimate functionalism of truth to materials and construction.
They emphasize structure, circulation, open space, industrial detailing, and
abstraction. A disadvantage of most modern architecture is that it does not
communicate these values with its users and the public in general.
Postmodernism started in architecture. Most postmodern architects have their
education and roots in modernism. There is no sudden disrupture.
Postmodernism is both the continuation and the transcendence of modernism.
Charles Jencks (1987, p. 14) defines postmodernism as: 'Double coding: the
combination of modern techniques with something else (usually traditional
building) in order for architecture to communicate with the public and a
concerned minority, usually other architects'. Double coding, irony, parody, lost
innocence, and hybrid language are the key words.

Double coding means establishing links of the present with the past, of new
techniques with old patterns, of the elite with the popular. It has always been the
task of architecture to fit new buildings into old structures and thus relating the
present with the past. Robert Venturi and Denise Scott Brown integrated
Franklin's house at Philadelphia with other buildings and 'ghosted' this house in a
stainless steel construction on Franklin Square.

An excellent example is James Stirling's addition to the Staatsgalerie in Stuttgart.

Stirling wants to communicate different values to different publics. Impressive
masonry hanged on a steel skeleton, as if the buildings says 'Beautiful like the
Acropolis or Pantheon, but based on concrete technology and deceit.' Modernist
steel canopies a la De Stijl tell the public where to walk in. But this is collaged to a
traditional background. Modernists and classicists would be surprised, if not
offended. There is not the simple harmony of one style, one language, or one
ideology. Stirling is saying through a hybrid language and uneasy confrontations
that we live in a complex world where we cannot deny the past and conventional
beauty, neither the present and current technological and social reality.

The architecture of buildings we live and work in, are part of our daily
consumption. We partly adapt our behavior to the built environment. The built
environment facilitates or inhibits well-being and behavioral expressions. The
head office of NMB bank in Amsterdam is a good example. It is a very varied and
complicated building with unexpected corners, windows, and see-throughs.
People who work there are enthousiastic. The apartment building of architect
Friedensreich Hundertwasser in Vienna may be mentioned. All appartments are
different from the outside (and certainly from the inside too). The windows have
different sizes and do not show a regular pattern. The masonry varies showing
different patterns. Ceramic tiles are used for decoration, especially of the pillars
and chimneys. Trees grow on the roofs.
Postmodernism started as a set of plural departures from modernism. Essential
are the pluralism in philosophy and style and a dialectical or critical relation to
pre-existing ideology. There is no single postmodern style in architecture,
although there is a dominating classicism. Jencks (1980) distinguishes six basic
traditions in postmodern architecture.

5. POSTMODERNISM IN ART

Many of the points made for architecture, could be made for art as well. The
modern painter Pablo Picasso became history, inspiring admiration like
Rembrandt but no opposition any more. The linear style of the painter Mondriaan
is still admired, but history as well. Since 1960, a number of departures from
modernism are named: pop art, hyperrealism, photo realism, allegorical and
political realism, new image painting, 'La Transavanguardia,' 'die neue Wilde' (the
New Savages), and neo-expressionism. The international media and the art
market exerted a pressure to produce new labels and schools. Pop artists in the
sixties, such as Andy Warhol, claimed that they were lending respectability to the
images they borrowed from mass culture through an artistic revision (Honnef,
1988). There remains a distinction between art and mass culture, but a painted
Campbell soup tin or Coca Cola bottles became works of art. Traditional art used
images from the past, from religion, the ancient Greeks, and from nature.
Avantgardism still maintained these values to some extent. Transavantgardism,
originating in Italy, found elements of mass culture suitable means to express
their emotions.

Postmodern art, transavantgardism or neo-expressionism, is influenced by the

'global village' (McLuhan, 1964) and shows an ironic cosmopolitism. The Italian
postmodernist painters Carlo Maria Mariani, Sandro Chia, and Mimmo Paladino
are both Italian and international. Their 'Italianness' is between quotation marks.
They live in the U.S. and borrow freely from Mediterranean traditions to create
secondary meanings. Postmodern artists are not only painters, but painters and
performers, photographers, architects, designers, and sculptors. Transavantgarde
art adds up to a multimedia-display.

Postmodern art is characterized by its layers of meanings. The surface may be

classicistic. It can be enjoyed by different publics for different reasons. It is
enigmatic and poses questions to the audience. Mythology, allegory, and
narrative are characteristic of postmodern art. There is more concern for content,
subject matter, symbolism, and meaning. While late-modernists emphasized the
aesthetic dimension, postmodernists emphasize semantics. Ron Kitaj's 'If not, not'
is an example. Survivors of war crawl through the desert to an oasis; survivors of
civilization are engaged in quizzical acts. A lamb, palm tree and a Toscan
landscape are reminiscant of a classical culture. But the Auschwitz Birkenau 'gate
of death' can be seen in the upper-left corner. The consequences of broken
promises and fragmented culture are the content of this gripping drama.

Postmodern art shows an unrestrained use of colour, forms, shapes and styles, a
wealth of imagination, and a carelessness towards orthodox artistic conformity.
Elements of 'higher art' are freely intermingled with lesser forms of art. It gives
the impression of a stylistic hotchpotch, a artistic supermarket, a collage or
pastiche. Playfulness exists with cynism. Attitudes range from irony to sarcasm.
'Lack of respect toward any convention' may be the best way of describing the
attitude of transavantgarde artists.

According to Andreas Huyssen contemporary art is currently in the midst of a

transition: 'Postmodern art of the eighties is marked by tension between tradition
and innovation, conservatism and progressiveness, mass culture and serious
culture. However, the latter is no longer given a privileged position over the
former, and the old dichotomies and categories no longer function in the same
old reliable way, e.g., progress vs reaction, left vs right, rationalism vs the
irrational, future vs past, modernism vs realism, abstraction vs representation,
avant-garde vs cheap rubbish' (Honnef, 1988).

6. POSTMODERNISM IN CONSUMPTION

Although architecture, art, literature, and music are 'consumed' by people, and
are thus examples of consumer behavior, we will now turn to the consumption of
other products and services in the marketplace.

The main characteristics of the postmodern wave according to Toffler (1970) are:
demassification, fragmentation, individualization, and an increasing speed of
change. Firat (1992) discerns five categories of the postmodern condition:
hyperreality, fragmentation, reversal of production and consumption, decentering
of the subject, and paradoxical juxtapositions of opposites. Some of Firat's
categories will be followed but given a somewhat different meaning and some
new categories will be added. It is obvious that these characteristics of
postmodernity are an attempt to chart the recent cultural developments. Others
may observe other trends or evaluate these trends differently. A postmodern
attitude of pluralism and tolerance is really needed here.

The major causes of postmodern change are social and technical. As social
changes may be mentioned: individualization, fragmentation, and paradoxical
juxtapositions. As technical changes will be discussed: hyperreality, complexity,
and value realization.

Social change

Individualization is a major trend. The 'postmodern household' has fewer

members and the proportion of one-person households is increasing. More
consumers will decide for their own consumption and more products will be used
individually. Advertising has to follow the changed role patterns of the working
woman and the househusband. Two-car families are no exception any more.
Radios have become a personal medium: the walkman and the car stereo as
examples. Many children possess their own hifi and television sets in their rooms.

Another social change is fragmentation with its many meanings. First, as

dominant ideologies and value systems tend to disappear and are replaced by a
plurality of values and norms, market segmentation can no longer be based on
lifestyles that are valid over a number product categories. Fragmentation also
refers to the disjointed experiences with each product, television program,
commercial, performance and meeting, without an integration at the individual
level. In postmodern terms, this leads to more acceptance of strange
combinations, paradoxical juxtapositions of opposites.

POSTMODERN CONDITIONS

Technical change

New developments in electronic information processing and satellite transmission

create possibilities for long-distance news films, simulation of reality on the
computer and in the IMAX theater. News and events from the other side of the
world reaches us in almost real time. Media provide us with phantasy, fiction and
non-fiction as entertainment and background. The hyperreality of the media and
the simulations partly replace the 'actual reality' (whatever this may be).
Products become more complex. Video cassette recorders possess many
functions. Personal computers and word processing programs require training
courses to use them effectively. Cooking and heating food with the magnetron
oven requires other skills. Although consumers have higher education levels than
before, they often feel being the servants of their products by 'following the
instructions.' In postmodern terms, this is called the decentering of the subject.

Finally, the emphasis shifts from the technical production to the usage of goods.
Not until consumers use products they acquire the meanings and values of them.
Postmodernists call this the reversal of production and consumption (Firat, 1992).
The impressive or expressive values are not produced with the purchase but with
the consumption of the product. Toffler (1970) states that production and
consumption coincide: prosumption. Value is produced only when consumers add
effort to the products they bought, just as a dinner at home is only produced with
the purchased ingredients and the time, effort and skills of the consumer.

7. FRAGMENTATION

Whereas in modern times centralised authority is common, the postmodern era is

the time of a decentralised pluralism and fragmentation. The lack of a central
ideology or a small set of ideologies leads to a variety of norms, values and
lifestyles adhered by more and more 'individualistic individuals.' Some media
seem to have adapted to this pluralism by offering fragmented experiences and
brief flashes of music, information and entertainment. MTV's program
'Postmodern' is a case in point. Some companies offer a variety of types and
'personalised versions' of their products and services as well. The fragmentation is
thus not only on the demand but also on the supply side.

The grand religious and political values and narratives lost their credibility.
Authorities connected to these narratives lost their authority as well. The
postmodern era is the time of secularization, scepticism and irony,
disenchantment (as Max Weber called this) and a plurality of beliefs.

As the single ideology lost its dominance, so did the single lifestyle. Consumers
adopt a certain lifestyle depending on the product domain (Van Raaij and
Verhallen, 1992). Some authors even go further and state that consumers live by
the moment, by their state-of-mind and mood, and should be segmented
according to their momentary state ('market sentimentation').
In fact, postmodernism allows almost all styles. No central authority dictates the
style for the next season. No Parisian haute couture, but a variety of designers in
London, Milan, New York, Paris and Tokyo propose their designs. Especially
subcultures have an important impact on new and old trends. Fashion specialists
have a hard time explaining which is the dominant style and which will be the
dominant styles for the next season. Sometimes this is explained as a 'fin de
siFcle' phenomenon, with the expectation that a new dominant style will develop
during the next century. Pluralism will, however, not be temporary but is a
permanenet characteristic of postmodernism.

The transition is from few styles to many genres. Not long ago, only one or two
styles were dominant at a time. Either you were for Gothic revival or a hopeless
pagan. Fashions, moral arguments, and conventions forced you in one camp or
another. Scepticism replaced dogmatism. The velocity of change is now much
faster. Almost any style can be revived. Eclecticism is the buzzword.
Superabundant choice and widespread pluralism force us to reassert a freedom of
choice and comparative judgment. Combinations and oppositions create new
alternative genres.

Disjointed experiences

The fragmentation of the information supply is mirrored in the fragmentation of

experiences. Products, services and brands represent disconnected experiences,
without linkages, contexts and historical roots (decontextualization). Postmodern
consumers are encouraged by marketing messages and images to play a game of
image-switching. The play the roles of the caring mother, the efficient manager,
the loving partner, and the gourmet cook. Self-monitoring is on the increase
(Snyder, 1987). Postmodern consumers do not possess one self-image but have
many self-images adapted to the requirements of the situation. The 'real self' is
hidden behind many situational, role-played selves, if there still exists a real self at
all.

The hyperrealistic collage leads to disjointed experiences and moments of

excitement. But these experiences are basically 'light and empty' (Kundera, 1984).
No central meaning, historical or contextual connection provides integration and
background. The Balinese culture became disconnected from its Hindu religious
background and became a marketable commodity and a tourist spectacle. Many
tourists, alienated from their religious background, visit churches as tourist
attractions without understanding the meaning of the paintings and symbols.
Beauty is a world betrayed. In the world of pastiche and collage, immediate
sensory gratification is greatly enjoyed. Consumers watch short commercials, see
flashes of billboards, numerous brands in the supermarket and department store,
advertorials and infomercials. One wonders how consumers process these
flashes, let alone integrate these.

Postmodernism means a freedom from constraints and conventions. Brand

loyalty may decrease. Attention to stimuli is not warranted. Each communication
must attract attention for its own sake, must be exciting to the senses to be
effective. Interest, attention and retention cannot be expected on the basis of
relevance, context, linkages, or connected representations.

Segmented production

In the modern era, mass production meant an endless repetition of the same
products. Economies of scale are reached by producing more of the same. In the
postmodern era, mass-production is not necessarily producing more of the same,
but more of different varieties and 'personalized versions' of a product. A Ford
Sierra has now so many varieties in colors, accessories, engine types that one will
seldom see two identical cars. The system can even be reversed: the buying
decision comes before the production. Rather than producing and stocking a large
variety of automobiles, customers may compose their own car (with engine types,
accessories, colours, and interiors) on a computer screen, and then order it as
they like it. It will then be mass-produced upon customer's specification.

Similarly, a variety of print media, radio and television stations cater to the
different 'taste cultures' (a term coined by the sociologist Herbert Gans).

Products become isolated from their contexts and even from their original
functions. Consumers, however, may attribute values and meanings to them
independently of their original functions. This may may go as far as 'sacralization'
of products, such as collectors' items, dolls, automobiles, antiques, and 'cult
items' (Belk, Wallendorf, and Sherry, 1989). Marketing practice is to glorify
products and brands, and to represent them as independent representations of
images. The 'Just do it!' ad for Nike shoes promotes liberation from traditional
patterns. The brand is the image and the product user is the hero. Benetton
became famous, and for some others notorious, for its anti-traditional and anti-
racist advertising, promoting world harmony and tolerance. Benetton advertising
became more and more detached from its clothing products.

The postmodern era is characterised by individualization, first of all

individualization of inequality (Naumann and Hufner, 1985). Traditional social
organizations of inequality, such as the family, social class, and trade union, may
finally vanish. The father figure as the representative of social roles and
conventions is lost. Individuals become their own 'identity managers' in the
decisions to work or to study, to marry or to stay single, to take children or not, to
adopt one or another lifestyle. As a consequence, there is a continuous search for
styles and genres, for personal and collective identities (Harvey, 1990; Korthals,
1991).

Traditional values and norms are based on principles about society and men's
relation to God. Postmodern values are less or non-principled. The new values
seem to be: irreverence, nonconformity, noncommitment, detachment,
difference, pragmatism, eclecticism, and tolerance.

Segmented media

Mass media are products of the modern era. Newspapers, magazines, and
television channels are losing their large audiences. In 1973 U.S. newspapers
reached their peak with a circulation of 63 million copies daily. Since then, the
newspapers are gradually losing their readership, not only to television, but also
to local and specialised dailies and weeklies. Newspapers with a political ideology
are most severely hit. Major general interest magazines, Life, Look, and Saturday
Evening Post, each went to its grave, and returned later in a more segmented
version (Toffler, 1980).

At the same time, we witness a growth of special interest magazines, related to

sports, hobbies, geography, gossip, health and fitness. For target groups as
diverse as teenagers, retired people, hunters, scuba divers, and minorities. The
number of radio and television channels is increasing as well, for local
communities and for specific segments in society. Between 1950 and 1970 the
number of radio stations in the U.S. doubled, whereas the population increased
by 35 percent. Instead of one station for each 65,000 American, there is now a
station for each 38,000. Broadcasting becomes narrowcasting. The segments in
spciety receive different information from their own media. A diversity of media
means a diversity of opinions and probably less consensus.

But the media are not perfectly segmented. We receive a diversity of often
contradictory information. An exhaustive synthesis seems to be untenable. At
best we receive 'video clips' of shattered information. Rather than receiving
organised strings of information, we receive short, modular 'blips': ads,
commands, theories, opinions, news flashes, that not easily fall in pre-set
categories and schemas. The postmodern man digests a 90-second news clip with
a 30-second commercial, a headline, a cartoon, part of a song (Toffler, 1980, p.
166), and it is up to the receiver to make sense out of this, to connect and to
categorise this overload of fragmented information. Journalists and advertisers
alike have to attract the attention of consumers by providing 'exciting' and
'senzational' stimulation in a clutter of others with similar stimulation. Madonna
is a good example. She provokes, elicits protests, gets admiration, but remains a
postmodern goddess with a detached attitude. In her film 'Truth or Dare' she
says: 'I do not endorse any lifestyle, I only describe one.'

8. HYPERREALITY

Simulations of the reality or hypes may become 'hyperreality.' According to

semiotic analysis, simulations are signifiers referring to a signified reality (Eco,
1986). A documentary movie is a hyperreality, as it is referring to the 'objective'
reality. Fiction may be called hyperreality, because there exists no corresponding
reality. Signifiers may become detached from their signified reality and may
become 'free floating.' Meaning structure analysis may explain the same
phenomenon. Toothpaste is originally connected with the mundane reality of
brushing your teeth. Brushing with a certain brand of toothpaste leads to the
consequence of having white teeth, fresh breath, and finally to values such as
attractiveness, sexiness, self-esteem, security and happiness. These values may be
added to the brand over time through advertising. These new meanings (images)
signify a new reality. This reality, when believed by the users of the brand feeling
more sexy, secure and happy, becomes a hyperreality for them. In postmodern
terms, the image does not only represent the product, but the product represents
the image.

The reality thus created is 'hyper,' because it is beyond what is the utilitarian and
economic reality in modern times. It is a psychological and social reality for the
brand users who feel this reality, communicate it to others through their usage
behavior, and are judged by others in terms of this reality. Advertising is a
powerful tool to add hyperreality to mundane products and brands. Advertising
becomes part of the hyperreality. Advertising may be even influence the
experience of brand usage. Through advertising After Eight acquired the
hyperreality of a 'upper-class' mint chocolate. People may even judge the quality
of After Eight higher than other mint chocolates, although there may be no
objective product differences.

As advertising adds hyperreality to products and services, it is difficult to define

the concept of misleading advertising any more. The benefits of the product are
not only physical/functional but psychosocial as well. Advertising is not only
information about the product. Transformational advertising is 'potential
experience' as part of the product. The 'augmented product' cannot exist without
the hyperreality created and reinforced by advertising. The truthfulness of
advertising can only be assessed after the experience of the product, in which the
consumer is an important part of the experience. If the consumer believes the
hyperreality of the advertising, the suggested reality may become self-fulfilling
and thus 'true' (Postman, 1985).

Postmodernists often mention show business, Las Vegas, the IMAX theater,
Disneyland or EuroDisney and other phantasy and magic worlds as examples of
hyperreality. Many vacation and recreation parks possess hyperrealistic elements
and non-authentic attractions, e.g., the 'tropical swimming park' with palm trees
while it is freezing outside. The spectacle and the spectacular often are hyperreal.
'Escape' magazines, such as Playboy, and movies, such as James Bond, produce a
hyperreality for their watchers and readers. Numbers of tourists visit the IMAX
theater as they visit the Grand Canyon to 'really experience the Canyon.' Cities
renovate the wharf and city center as images of the past. The 'Boston tea party' is
almost daily simulated for tourists. Sound and light shows conjure up the past and
create a hyperreality. In these examples a 'virtual reality' is created or enhanced
with help of media and theater, in order to provide the desired experiences to the
audience. Computer simulation such as Cyberspace creates a virtual reality of
buildings and scenery that may be used by architects and town planners to 'walk'
through a not yet created built environment. Flight simulators are just a first step
into cyberspace. The futuristic idea in the movie 'Total Recall' may become true. A
travel agency delivers a dream tour, realized in cyberspace without transporting
the tourist over long distances. Media experiences compete with real
experiences.

In the near future, it may be expected that 'virtual reality' will become a new and
exciting product/service. Through computer simulation, virtual realities may be
created for the visual, auditory and even kinesthetic senses. How does it feel to
fly at sound speed or to raft on a wild river? People no longer have to travel to
distant sightseeing objects, but may experience being at the Chinese wall or
Amazone river, actually being at their local 'Omniversum.'

Although hyperreality may have started as a 'rich and thick' meaning structure,
the meaning may have become detached from the object ('free floating' as
semioticians would say) and become only 'surface without substance.'
Implications of hyperreality are thus: lack of context and loss of history.
Hyperreality may thus become a set of disjointed experiences. Examples are seen
on television: news flashes, videoclips, superimposed images, animations, and 10-
seconds commercials create a visual image, pastiche and collage. Younger
generations are more accustomed to television and movies than to print media,
and thus more to visual rather than to textual information processing. The print
media have become more pictorial and thus visual. Through media sponsorship
and the merging of the editorial and advertising content of media brand names
become an important part of this collage. Voyeuristic exposure to the spectacle
seems to have become the cultural passtime. The duality of the appearance
(surface) and the essence (substance) is largely dead in postmodernity. The
surface is the essence and the medium is the massage (McLuhan, 1964).

9. VALUE REALIZATION

It is traditional rhetoric that value is created in the production of goods and

destroyed in consumption. Later economists stated that value is created in the
exchange of goods. Jean Baudrillard (1975, 1981) argues that value is sign-value,
created during consumption. During consumption the image belonging to the
product or brand is recreated as a benefit for the consumer. Marketing,
emphasizing the satisfaction of needs, has always been postmodern in defending
that consumption is the end of production, both in the sense of the goal and the
final state. But marketing is often focussed on the act of purchase rather than
usage. Personal identity is created and recreated on the basis of usage rather
than on the basis of production or purchase. Consumption becomes more
important. Many people identify themselves by their consumptive activities, their
sports, hobbies or music preferences rather than their jobs.

In modern times, the image represents the product. But value is no longer a
property of the product, but a property of the image. The product represents the
image and the image is the reason of the consumer to buy and to use the product.

Confusion of subject and object

Toffler (1980) predicts the rise of the prosumer, a combination of producer and
consumer. This is not a new phenomenon, because almost all services and
products require an active input and participation of the consumer to enjoy the
benefits. What is a restaurant dinner without the good humour and positive
participation of the customers? The benefits of a novel are only enjoyed by
reading it. A dinner at home requires ingredients from the marketplace and a lot
of household production of preparing and cooking to obtain the pleasure of the
meal. Do-it-yourself home maintenance, medical self-care, and 'distance
education' are prosumptive activities on the increase.

In traditional rhetoric, the subject is the agent that acts through objects and
situations to produce certain benefits and value realizations. Knowledge and
independent behavior is possible through the Cartesian idea of the separation of
mind and body. Persons are able to distance themselves from the experience of
'being' (the state most animals are in) to observe themselves and to develop a
state of 'knowing.' The products of modernity are thus under the control and in
the service of consumers in order to create benefits for themselves. Products are
there to allow the achievement of human goals.

In postmodernism, a decentering of the subject may be observed. Production and

consumption are parts of the same cycle. Consumption choices and experiences
tend to determine one's taste, values, lifestyle, skills and ability for future
behavior. Traditionally, individuals are the producers of benefits with help of
products as commodities. In postmodern terms, commodities seem to become
the producers of benefits for individuals who follow the instructions correctly.
There is a confusion of the subject and the object who is in control (Hassan,
1987). The objects seem to determine the conditions and procedures of
consumption. Consumers have to follow instructions in order to obtain the
benefits and to avoid problems. Imagine the joy of the 'possessor' of a new
telefax machine or personal computer after a troublesome series of trials and
tribulations: 'It works!' Mastering of some products is only realised after a trial
and training period. In an ironic way, one could state that consumers are there to
allow products to achieve their functions.

'Being in control' is a major goal of postmodern consumers realising that their hifi
equipment, their fax and washing machines, VCRs, and personal computers, are
often too complex to be mastered completely. Consumers often only use a
limited set of the possible product functions, feel uneasy about the latent options
and happy with at least the functions they actively master.

The confusion of subject and object is also present in the 'self-marketing' of

individuals. Consumers may perceive themselves as marketable items and
manage their images as perceived by others, both in the job and in the social
environment. This is described by the concept of self-monitoring (Snyder, 1987).
Fashion becomes the metaphor for culture. Objectification and commodification
of one's own body and self allows one 'to be consumed' by others, just like a
product fulfilling a function in the marketplace. Individuals such as hostesses,
receptionists and television presenters become objects in expositions, offices, and
shows. This commodification of selves leads to beauty contests and, in the
extreme case, to prostitution.

10. PARADOXICAL JUXTAPOSITIONS

The major characteristic of postmodern culture is its paradoxical nature. Anything

may be combined with and juxtaposed to anything else. Creativity defined as the
original combination of elements is very postmodern. Even oppositional and
contradictory emotions (love with hate) and cognitions (reverence with ridicule)
can be expected. Irony and double meaning can be observed in art, architecture,
music, products, and advertising. In the U.K., a brand of cigarettes became
popular in a black package with a skull and the brand name Death. All warnings
are clearly printed on the package including the message: '10% Percent of profits
donated to Cancer Research.'

Postmodern advertising is shocking for some and liberating for others. Ads show a
newborn baby or a dying Aids patient with the United Colors of Benetton. Many
ads show no product at all but attract attention with a bizarre combination of
visuals and impressions. The pastiche of flashes seems to be basically unrelated to
the product or the brand, although the ads may elicit positive senzations and
emotions without an deep meaning.

The modern era was a time of consistency; the postmodern era requires a
kaleidoscopic sensibility and tolerance. The postmodern era brings a taste for
variety, incongruity, heterogeneity, irony, double meaning, and paradox. Daily
newspapers bring us a strange variety of 'news.' Newsstands are overloaded with
special interest magazines. In the films of Federico Fellini, a mad competition of
opposite tastes create hilarious misunderstandings and sadness. Not everyone
likes this kaleidoscope of pluralism. Most people make their choice and restrict
themselves to one or two genres. This loyalism makes the plurality work
coherently. But even if everybody is limited to a few minority taste cultures, there
remains a residual taste for pluralism.

As a dominant ideology or style is absent, there is a sensibility in the public sphere

for lifestyle and identity information. People and media provide information and
demonstrations how to behave, how to talk, and what should be done and
avoided. People, television programs, popular magazines, and advertising tell us
what is 'in' and what is 'absolutely impossible.' Television is very appropriate for
communication on lifestyle. It tells intimate stories how people give sense to their
lives and solve life problems. Behavior and language of actors and pop singers can
easily be imitated.

Most characteristic of the postmodern era is the openness. We are informed

about conflicts, viewpoints, styles, and opinions from all over the world.
Emancipation of women and homosexuals created a pluralism accepted by many.
A cosmopolitan attitude leads to more acceptance of differences. From exclusion
to inclusion. Benetton and Coca Cola advertisements show a multi-colored world
and acceptance of other races and cultures. In the postmodern era we look to the
past and to other cultures with irony and displacement. We may return to
'modern times,' if we want or if we need. Previous conditions are included in the
present, postmodern condition.

Anything is at once acceptable and suspect. On the one hand postmodernism is

liberating, on the other hand it is frustrating for persons seeking radical
transformation of society, since nothing is sufficiently credible to merit
commitment. In a fragmented culture, organized action for political and social
change is almost impossible. This renders the market to be the dominant domain
of legitimation. Anything can be tried and dropped. No emotional or cognitive
commitment beyond a single purchase or trial is needed. Consumers are
immersed in a sea of impressions and experiences but are not taken seriously if
they oppose this immersion. The market becomes the great assimilator (Firat,
1992). The market absorbs all kinds of protest and rebellion. Punk protest
becomes emptied and commodified as a fashion.

The media become dominated by the 'market.' Editors agree that their articles are
sponsored by advertisers. The newsworthiness of events is determined by the
market. News programs on commercial television, the covers and articles of
magazines are designed to attract audiences and buyers. Voters become buyers
of carefully 'designed' political candidates rather than political programs. The
American presidential elections are built on, often commercial, campaign funds,
advertising, and the 'right' issues at the 'right' time. Poll taking and market
research have very similar functions. The roles of citizen and consumer become
similar and seem to merge. Marketing becomes an imperialistic art and science,
dominating western culture and society at the 'end of history' (Fukuyama, 1992).

11. CONCLUSIONS AND DISCUSSION

Postmodernism is not a single cultural style but an increasing pluralism of styles

and genres. The absence of a dominant ideology is liberating on the one side but
creates insecurity and an 'embarras des choix' on the other side. This pluralism is
reflected in architecture, art, literature, music, advertising, and consumption. In
this paper, the major postmodern conditions in consumption are: fragmentation,
hyperreality, value realization later in the consumption cycle, and paradoxical
juxtapositions of opposites.

The consequences for consumer research and marketing are manifold. In the
liberal-democratic postmodern societies, marketing may play a key role in giving
meaning to life through consumption. Is marketing with its value realization
replacing ideologies and religion? And is this a good thing for mankind? Value
realization through consumption may be practical and utilitarian. In this sense it is
not replacing ideology. Value realization may be hedonic and momentary and is
thus often superficial and ego-centered. Self-marketing is mostly self-centered, as
it is concerned with improving one's own position and welfare among others.
Although marketing may induce people to donate money to 'good causes,' such as
the Red Cross and Greenpeace, by appealing to their guilt feelings, it is certainly
not enough to give 'real' meaning to one's life.

REFERENCES

J. Baudrillard, The Mirror of Production, St Louis, MO: Telos, 1975.

J. Baudrillard, For a Critique of the Political Economy of the Sign, St. Louis, MO:
Telos, 1981.

Z. Bauman, Intimations of Postmodernity, London/New York: Routledge, 1992.

R.W. Belk, M. Wallendorf and J.F. Sherry, Jr, The sacred and the profane in
consumer behavior: Theodicy on the Odyssey, Journal of Consumer Research, 16,
1989, 1-38.

D. Bell, The End of Ideology. On the Exhaustion of Political Ideas in the Fifties,
New York: The Free Press, 1962, revised edition.

P. Bourdieu, La Distinction. Critique Sociale du Jugement [The Distinction. Social

Critic of Evaluation], Paris: Minuit, 1979.

I. Chambers, Border Dialogues. Journeys in Postmodernity, Comedia Book,

London/New York: Routledge, 1990.

U. Eco, Travels in Hyperreality, San Diego, CA: Harcourt Brace Jovanovich, 1986
[translation from Italian].

A.F. Firat, Postmodernity: A marketing age, Journal of Marketing, 1992, in press.

F. Fukuyama, The End of History and the Last Man, New York: The Free Press,
1992.

E. Goffman, The Presentation of the Self in Everyday Life, Woodstock, NY: The
Overlook Press, 1973.

K. Hametner and W. Melzer, Hundertwasser-Haus [Hundertwasser House],

Vienna: Orac, 1988.

D. Harvey, The Condition of Postmodernity, Oxford: Basil Blackwell, 1990.

I. Hassan, 'The question of postmodernism,' in: H.R. Garvin (Ed.), Romanticism,
Modernism, Postmodernism, Lewisberg, PA: Bucknell University Press, 1980, pp.
117-126.

K. Honnef, Contemporary Art, Cologne, Germany: Taschen, 1988.

R. Inglehart, The Silent Revolution. Changing Values and Political Styles among
Western Publics, Princeton, NJ: Princeton University Press, 1977.

R. Inglehart, Culture Shift in Advanced Industrial Society, Princeton, NJ: Princeton

University Press, 1989.

P. Jackson, Maps of Meaning. An Introduction to Cultural Geography, London:

Unwin Hyman, 199.

C. Jencks, What is Post-Modernism?, New York: Academy Editions, 1987, second

printing.

M. Kundera, The Unbearable Lightness of Being, London: Faber and Faber, 1990
[1984].

J.-F. Lyotard, The Postmodern Condition: A Report on Knowledge, Manchester:

Manchester University Press, 1984 [original in French: 1979].

J.-F. Lyotard, L'Enthousiasme. La Critique Kantienne de l'Histoire [Enthousiasm.

The Kantian Critique of History], Paris: Editions GalilTe, 1986.

M. McLuhan, Understanding Media, London: Routledge and Kegan Paul, 1964.

J. Naisbitt, Megatrends, London: Futura, 1984.

J. Naumann and K. Hufner, 'Evolutionary aspects of individual and social

development,' in: J. Naumann and K. Hufner (Eds.), Individual Development and
Social Change, New York: Academic Press, 1985.

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February 1990, 4-21.

N. Postman, Amusing ourselves to Death: Public Discourse in the Age of Show

Business, New York: Penguin Books, 1985.
M. Snyder, Public Appearances. Private Realities, New York: Freeman, 1987.

A. Toffler, Future Shock, Toronto: Bantam Books, 1970.

A. Toffler, The Third Wave, Toronto: Bantam Books, 1980.

A. Toynbee, A Study of History, Oxford, U.K.: Oxford University Press, 1934- (12
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W.F. Van Raaij and T.M.M. Verhallen, Domain-specific market segmentation,

Papers on Economic Psychology, Nr. 93, Rotterdam: Erasmus University, 1992.

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B. Woolley, Virtual Worlds. A Journey in Hype and Hyperreality, Oxford: Blackwell,

1992.

post-modernism and post-modernity

Page upon page of print has been devoted to the post-modernism. But what
actually is it, and what implications does it have for informal educators? Barry
Burke investigates.

recognise that things never stay the same. Greek philosophers were quite aware
that society changed continuously. Heraclitus maintained that society was in
constant flux, everything was always on the move. You can’t jump in the same
river twice, he maintained. Philosophers and thinkers have, throughout time,
believed that society moved according to immutable and unchanging laws, that
there was a driving force that drove society onward. In modern times we have
looked towards the evolution of society as a progressive one. Humankind, as a
result of the development of rational and scientific thinking, was not only
conquering the world we live in but also looking to the stars.

Modernism

This progressive movement of society is associated with what has been described
as modernity or modernism. It is essentially a historical period in Western culture
and has its origins in the Enlightenment at the end of the 18th century. The
Enlightenment, and the historical period that it brought in, it can be argued, is
characterised by three major features.

 Intellectually, there was the power of reason over ignorance;

 There was the power of order over disorder; and
 There was the power of science over superstition.

These three features were regarded by many as universal values. It was believed
that through these the old ruling classes with their outmoded ideas could be
defeated. Modernity was ‘revolutionary’ and in many respects the French
Revolution of 1789 was the personification of these features. They heralded the
advent of capitalism as a new mode of production and a transformation of the
social order. These basic beliefs provided the basis upon which humanity was to
be able to achieve progress.

Instead of looking backwards to a Golden Age, enlightenment was now seen as

possible in the present through the application of reason. It was through reason
that enlightenment, the conceiving of infinite possibilities, would enable the
emancipation of humanity to take place: emancipation from ignorance, poverty,
insecurity and violence. (Leonard 1997:6)

Until quite recently, there was a common belief that despite all the trials and
tribulations suffered throughout the world, there was a general movement
towards human emancipation. It was felt that society moved on. There were blips
in this movement, it was not smooth: wars and famines, natural and man-made
disasters took place but these were usually overcome and we all moved on.

However, in the late 1970s, a movement began amongst French intellectuals, that
questioned this view of society as moving onwards and upwards, and that there
was some unseen driving force within society. It rejected any notion that we were
still within the modern era brought in by the Enlightenment, two hundred years
ago. The modern world according to these new thinkers had clearly brought in the
era of industrial capitalism and scientific thinking but it had also brought in the
world of Aushwitz, of the possibility of nuclear war, the horrors of Nazism and
Stalinism, of neo-colonialism, Eurocentrism, racism and Third World hunger. If this
was the legacy of modernism, it wasn’t very pleasant. Had the ideas of the
Enlightenment brought us to this? If it had, they thought, to what extent had it
been justified by grand theories of society? Wasn’t it more appropriate to see
these theories as quite dangerous? They also felt that if modernism had brought
in the type of society loosely described as modern industrial society then surely
we had now gone beyond it? Had we not now entered a new age - the age of
post-modernism?

So what is post-modernism?

A major problem we have is trying to find a useful definition of post-modernism.

Most definitions are hopelessly vague and often inconsistent with each other.
There is a considerable amount of confusion about the terms: modernity,
modernism, post-modernity and post-modernism. Modernism andpost-
modernism have tended to be associated with aesthetic ad intellectual
movements such as that in architecture and literature; modernity and post-
modernity have tended to be used to refer to changes in social and economic
institutions (see Giddens 1990). However, this is not a hard and fast distinction.
Much of the talk of post-modernism has been concerned with social and
economic change.

To get any further we need to examine distinct trends.

Art

Firstly, there is postmodern art - not just painting and sculpture but also
architecture, music, literature, drama etc. It’s main features are a lack of depth
and of meaning. There is a diversity of forms and content. The art critic Suzy
Gablik gave a talk in Los Angeles where she spoke about the

… multidimensional and slippery space of post-modernism [where] anything goes

with anything, like a game without rules. Floating images … maintain no
relationship with anything at all, and meaning becomes detachable like the keys
on a key ring. Dissociated and decontextualized, they slide past one another
failing to link up into a coherent sequence. Their fluctuating but not reciprocal
interactions are unable to fix meaning." (quoted in Callinicos 1989:12).

While this may sound strange, you do not have to go to Los Angeles to see what
she was talking about. Throughout the UK, for example, new buildings have been
going up over the last decade or so that seem completely out of keeping with
anything that has gone before. Many of our cities have been ‘rejuvenated’ by
architects who have been given free reign to satisfy their professional fantasies.
London Docklands is a good example here. Take the Docklands Light Railway
through what used to be one of the world’s busiest ports and you will see post-
modern architecture in all its glory. Similarly, adverts and pop videos are good
examples of postmodern art. Using operatic arias to promote football matches,
classical music to persuade us to fly a particular airline, watching Pavarotti in the
Park - there is no longer a distinction between high and popular culture (‘anything
goes with anything, like a game without rules’).

Culturally, the growth and influence of the media whether it is the advertising
industry, television or film has also led to tremendous changes in how people see
the world. Many postmodernists would argue that image is everything, image is
reality. Disneyland, MTV, Macdonalds is real life. Real life is what we see on
television, television becomes real life. Krishan Kumar maintains that
postmodernists see the media in a quite different way to those who regard it as
merely a method of communication.

For them the media today do not so much communicate as construct. In their
sheer scale and ubiquity they are building a new environment for us, one which
demands a new social epistemology and a new form of response. The media have
created a new ‘electronic reality’, suffused with images and symbols, which has
obliterated any sense of an objective reality behind the symbols … In hyperreality
it is no longer possible to distinguish the imaginary from the real …" (Kumar
1997:99).

Philosophy

The second trend within post-modernism is a philosophical one. In the 1970s, the
group of French philosophers, I have already mentioned, mainly on the Left, had
become disillusioned with the heady days of the late 1960s when Western Europe
and the United States were in political turmoil. For a short period in 1968, there
seemed a strong possibility that major political changes could take place
throughout the Western world as a result of action by students, trade unionists,
anti-Vietnam war protesters, liberal Communists and militant Socialists. This was
not to be and in France where the struggle was arguably the most intense, this led
to a waning of the huge influence previously wielded by the large Communist
Party (to which most of these intellectuals owed allegiance). This disillusionment
led to their disengagement with politics and their distrust of grand theories, such
as Marxism, which they felt attempted but failed to explain the reality of social
life and began to form ideas that slotted in to the themes explored by
contemporary artists. Despite their many disagreements, they stressed the
fragmentary and plural character of reality. They denied human thought the
ability to arrive at any objective account of that reality. Any ideology or social
theory that justified human action as a means to progress or order was
condemned as meaningless. The grand social theory or narrative that justified
human activity, whether it was Marxism, liberalism or Fascism is no longer
credible, they argued. There are no universal truths. All they have done in the
past is legitimate the power of those who know and deny power to those who do
not know.

New Times

Thirdly, these two trends, in art and philosophy, seemed to reflect what was going
on in the social world. It was felt by many, particularly on the British Left, that we
were actually living in what they called ‘New Times’. At the heart of these ‘New
Times’ was the shift from the old mass-production Fordist economy to a new,
more flexible, post-Fordist order based on computers, information technology
and robotics. Marxism Today, wrote (in 1988) that our world is being remade.

Mass production, the mass consumer, the big city, big-brother state, the
sprawling housing estate, and the nation-state are in decline: flexibility, diversity,
differentiation, mobility, communication, decentralization and internationalisation
are in the ascendant [my emphasis]. In the process our own identities, our sense
of self, our own subjectivities are being transformed. We are in transition to a
new era. (quoted in Callinicos 1989:4)

Many people accept that we do live in a different kind of society today to that of a
relatively few years ago. However, what type of society is it that we now live in? A
number of theories have already been put forward, some of which you may be
familiar with.
Post-industrial society?

The concept of the post-industrial society is linked with the work of Daniel Bell.
He maintained that there was a progression from traditional society based on
agriculture to industrial society based on modern manufacturing industry and
then to post-industrial society where the emphasis on the production of goods
has been overtaken by the service economy. This post-industrial society,
according to Bell, has meant a change in the social structure so that we now live
in a ‘knowledge society’ run by university-trained professionals and a technical
elite whereas before we lived in an industrial society run by industrialists and
employers. Bell’s analysis of the trend away from the traditional industrial base
typical of Western Europe and North America won a considerable amount of
support but it needs to be looked at with a more critical eye.

In the first place, it was never the case that the majority of the workforce in the
UK were ever involved in manufacturing except for a brief period in the 1950s.
Usually less than half of the working population were in manufacturing. Secondly,
although there has been a shift from manufacturing into the service sector, this
can be accounted for by the increased productivity in the manufacturing sector
(which means that fewer people can produce more goods). The service sector, on
the other hand, is labour-intensive and productivity is relatively poor. This does
not mean that the British economy is becoming post-industrial but it does mean
that fewer people are employed in the manufacturing sector.

Where Bell was also mistaken is when we look at the social consequences of this
change. Bell maintained that the replacement of manufacturing by service
industries would usher in the knowledge society and a vast increase in white-
collar employment. There would be created an elite of technicians, information
experts, computer buffs, systems analysts, financial managers etc. What actually
happened was that as the service sector took on more workers, they included not
only more managers, executives, professionals and administrators but also more
clerical workers who were often low paid and as insecure as any worker in
manufacturing industry. Similarly, with the expansion of supermarkets in the
retail sector, more and more non-clerical workers were employed at fairly low pay
and high levels of insecurity.

Hardly what one would call the ‘knowledge society’.

At the same time that all this was happening, manufacturing actually grew in the
Third World so that there has been a considerable growth in the industrial
working class world-wide. There is simply no evidence that society as a whole is
changing from an industrial to a post-industrial one.

Post-Fordist capitalism?

Associated with the journal, Marxism Today, and the writings of Stuart Hall and
others, the post-Fordist thesis argues that contemporary capitalism is
experiencing a shift in its character. Fordism can be seen as a system of mass
production involving the standardization of products; large scale use of dedicated
machinery suitable only for a particular product; and the ‘scientific management’
of labour and assembly line production. The high fixed costs involved required
guaranteed mass markets. As a result you could say that Fordism was
characterised by mass production and mass consumption. This in turn was
encouraged by mass advertising, the protection of national markets and
intervention by the state to ensure that there were no catastrophic falls in
demand.

This actually worked for many years after the Second World War. However at the
end of the 1960s and the beginning of the 1970s, Fordism, it is argued, collapsed.
In its place, a new variant of capitalism, post-Fordism began to take shape. Just as
Fordism was production-led so post-Fordism is consumer-led. The introduction of
computers has meant that distribution systems have enabled retailers to avoid
overstocking and has allowed mass markets to be split up into the targeting of
specific groups. Targeting specific groups of consumers has meant that design has
become a major selling point. Henry Ford said that when he brought out his first
car, the buyer could have any colour he wanted as long as it was black! Post-
Fordist industry cannot do that. Every major car produced today has a number of
models the consumer can choose from. Commodities are no longer bought simply
for the use value they have, but also for the lifestyle that goes with their design.
Just think of Adidas and Nike advertising. Image is all important in the
postmodern era.

In addition to this, the new technology, based on computerised systems, means

flexibility, smaller plant-size and a different workforce. Large numbers of semi-
skilled machine minders are no longer required. What is required is a smaller
multi-skilled workforce capable of participating actively in the labour-process.
Below this, mainly white, male and relatively well-paid group, is a peripheral
workforce, low-paid, temporary, often part-time, often non-white, often female.
What post-Fordism has produced, according to the Marxism Today analysis, is an
increase in income and freedom for some and a decrease for others.

The problem is that it is not at all clear whether post-Fordism actually exists.
There are still mass markets for standardised products. People still want washing
machines, fridges and cars. The technology is not necessarily dedicated to one
specific product but can be reused for different products and although the
workforce has changed, secure and well-paid employment is not necessarily
guaranteed for anyone, not just the low-paid. These are important points that the
post-Fordists have not quite come to terms with.

Disorganised capitalism?

A third theory, I want to examine briefly is that of Scott Lash and John Urry. They
argue in their book, The End of Organised Capitalism, that Western societies are
currently undergoing a transition from ‘organised’ to ‘disorganised’ capitalism.
Organised capitalism - which existed for most of the twentieth century – involved:

 the concentration of capital; the separation of ownership and control;

 the growth of the professional, managerial and administrative ‘service
class’;
 the regulation of national economies by the state in co-operation with
business and the trade unions;
 the dominance of manufacturing industry;
 urbanisation; and
 the development of the nation-state.

Disorganised capitalism, which is how Lash and Urry characterised today’s society,
consists of the disintegration of state regulation, the expansion of world markets
dominated by multinational corporations, the undermining of the nation state,
the growth of manufacturing in the Third World and the decline of manufacturing
in the West. Accompanying this is the growth of a ‘service class’ that undermines
trade unions and the labour movement with the subsequent erosion of class-
based politics. Finally, cultural life becomes more fragmented and pluralistic. All
of this is reflected in the rise of post-modernism.
To me, a lot of what they say makes sense. The disintegration of the role of the
state, particularly in welfare provision; the erosion of trade unionism and the
growth of individualism and consumerism; the globalisation of the market and
manufacturing; the development and growing influence of the multinational
corporation all point to a qualitative change in society.

However, one of the real problems with the concept of post-modernism is that it
is all so vague. Henry Giroux writes about its ‘diffuse influence and contradictory
character’ (Giroux 1997:117). There is no agreed definition so that it is embraced
by both many on the Left and the Right with equal fervour. The emphasis on
flexibility and diversity can be seen as both a positive characteristic and as a
negative one. It is positive in so far as it draws us away from seeking "the Truth".
There is a complete rejection of any grand theories to explain social phenomena.
Iconoclasm is the order of the day. Scepticism replaces certainty. ‘New ideas and
fresh conceptualisations, new discourses such as feminist, post-colonial, gay and
green discourse have been found necessary to help explain the contemporary
condition’ (Usher et al 1997:6). Diverse perspectives are welcomed and difference
is celebrated.

On the other hand, Phil Cohen describes what he terms ‘the post-modernist
overview’ as one "which does not privilege any of the elements in play … but
juggles around trying to keep as many ideas in the air at once as it can’. He warns,
however, that ‘in the wrong hands it can quickly degenerate into collage and
pastiche in which everything is rendered equivalent in the cultural supermarket of
ideas’ (Cohen 1997:390/1). This relativism with everything being rendered
equivalent or anything going with anything sits uncomfortably in a world that can
be quite frightening for those who hanker after an ordered world. Zygmunt
Bauman, one of the foremost writers on post-modernism, sheds some light on its
ability to debunk old established ideas and discredit outdated modes of thinking
when he describes its ‘all-deriding, all-eroding, all dissolving destructiveness’.
post-modernity, according to Bauman ‘does not seek to substitute one truth for
another, one life ideal for another … It braces itself for a life without truths,
standards and ideals’ (Bauman 1992:vii, viii, ix). It is quite easy to see how the rise
of religious fundamentalism, whether Christian, Islamic or Jewish, seems
attractive to some people afraid that their world is being undermined. The rise of
the Right-wing ‘Moral Majority’ in the United States, the hankering after a return
to ‘Victorian values’ in Britain are also examples of how some people have
reacted to their fear of change.
Implications

However, what does this mean for the informal educator? Do we, in our day-to-
day practice, work on the assumption that values are relative? Can we talk about
core values? If difference is celebrated, what about commonality, mutuality and
co-operation? How do we work in a multi-cultural, multi-ethnic, multi-faith and
pluralist society? Can we talk about informal educators working for ‘the common
good’? Is there such a thing as ‘the common good’?

Certainly, these dilemmas are very real. On the one hand, most of us would
accept that in any decent society we are all dependent on each other, that we do
share many things in common. However, this can appear extremely bland to
those who clearly see themselves to be different. It is very easy to marginalize
people by ignoring differences. We hear talk about the Scottish nation, the
Protestant (or Black) community, the Germans, ‘local youth’ etc. Who decides
who is included in these descriptions and who is excluded? The question of
identity is crucial here.

In post-modernism, ‘identity is not unitary or essential, it is fluid or shifting, fed by

multiple sources and taking multiple forms’ (Kumar 1997:98). We are all unique
and have our own distinctiveness but we also have much in common. Being aware
of this is essential for informal educators.

Difference and commonality

Take the notions of being black, gay or thin. These are identities that are socially
constructed, and given meaning by our fragmented society. However, we have to
ask ourselves the question why these socially constructed categories are
distinctive and not others. What is so special about skin colour, sexuality or size
that we proclaim them as different? Different to what? By accepting these
differences and, even more importantly, celebrating these differences, are we not
accepting the status quo? He is black, she is gay, they are thin. So what? Are there
no grounds for mutuality and association? Should we not question these
differences rather than celebrate them?

On the other hand, I can see why, within a fragmented and divided society, those
who are regarded as different see those differences as something that should be
accepted and not a reason for discrimination or marginalisation. Why shouldn’t
black people or gays and lesbians take pride in their blackness or sexuality? Why
shouldn’t they organise themselves to counter discriminatory practices in society?

There is a clear difference here in perspectives. Within the realms of youth and
community work, informal educators need to be able to respond and influence
the dialectic between commonality and difference. Too much emphasis in our
practice on commonality can lead us down the road to ignoring the differences
between individuals and the diversity of cultures that abound in our localities and
in our workplaces. Too much emphasis on difference can lead us down the road
to separation, segregation and exclusion.

Welcoming cultural diversity within our changed society does not mean accepting
cultural practices and beliefs without question. It means understanding them in
context whilst at the same time working ‘not for assimilation but for co-operation
on the basis of difference … being in touch with your cultural identity and pre-
judgements, having a sense of agency, and looking to an acceptance of diversity
and a search for that which is held in common’ (Smith 1994:120/1).

Agency

This brings us to the question of human agency. We cab pose the question as to
whether society was an entity outside of individuals that acts upon them or
whether individuals act upon society. We might turn to the problems that
C.Wright Mills highlighted between personal troubles and public issues and the
need to see the relationship between the two. However, postmodernist writers
have tended to move the argument on somewhat. Some of them are distinctively
uneasy about the ability of human beings to affect the world we live in. They see
us as corks being tossed about in a turbulent sea of change, being pushed one
way then another with no ability to affect the direction we want to go in. The
human subject is not inherently free ‘but hedged in on all sides by social
determinations’ (Layder 1994:95). Michel Foucault, for example, argued at one
point that human societies can be seen as places in which forms of knowledge
(discourses) exercise power over us through the way we think and the way we
behave. The individual is no longer the source of meaning, in line with
Enlightenment thinking, but is ‘decentred’. This can be seen as being extremely
pessimistic from a humanistic perspective and is a view of human agency that
poses important questions for informal educators. Foucault did modify his views
somewhat so that he later saw discourses as foci for struggle and resistance.
However, the idea of the individual subject as a creative autonomous being was
certainly something that Foucault rejected. This is clearly at odds with what many
would see as one of the central tenets of informal education – ‘the belief that
people can take hold of their lives, can make changes, that they are not helpless
in the face of structural forces’ (Smith 1994:119).

Conclusion

In this piece we have looked at the changes that have taken place in society over
the last few decades and briefly examined the idea that we have now entered
into a new postmodern era. This new era has been characterised by a rejection of
absolute truths and grand narratives explaining the progressive evolution of
society. At the same time it has brought to the surface a multitude of different
perspectives on society and an appreciation of different cultures. It has
highlighted globalisation on the one hand and localisation on the other, the
celebration of difference and the search for commonality.

Henry Giroux, in analysing some of the central assumptions that govern the
discourses of modernism and post-modernism together with postmodern
feminism, has summed up what these can mean for educators. In doing this, he
did not set up one against the others but tried to see how and where they
converged. He maintained that within these three traditions,

pedagogy offers educators an opportunity to develop a political project that

embraces human interests that move beyond the particularistic politics of class,
ethnicity, race and gender.

This is not a call to dismiss the postmodern emphasis on difference, as much as it

is an attempt to develop a radical democratic politics that stresses difference
within unity … The struggle against racism, class structures, sexism, and other
forms of oppression needs to move away from simply a language of critique, and
redefine itself as part of a language of transformation and hope. This shift
suggests that educators combine with other cultural workers engaged in public
struggles in order to invent languages and provide critical and transformative
spaces … that offer new opportunities for social movements to come together. By
doing this, we can re-think, and re-experience democracy as a struggle over
values, practices, social relations, and subject positions that enlarge the terrain of
human capacities and possibilities as a basis for a compassionate social order.
(Giroux 1997:128/9)

Further reading

General texts - modernity and post-modernity

Anderson, P. (1998) The Origins of post-modernity, London: Verso. 160 pages.

Traces the genesis, consolidation and consequences of the notion of the
postmodern. Places post-modernism in the 'force field of a déclassé bourgeoisie,
the growth of mediatised technology and the historic global defeat of the left
symbolized by the end of the Cold War'. Views post-modernism as the cultural
logic of a multinational capitalism 'complacent beyond precedent'.

Beck, U. (1992) Risk Society. Towards a new modernity, London: Sage. Translation
of Beck's 1986 classic. Argues that western industrial society is moving into a
'post-Enlightenment' / post-Fordist phase and that this involves a different
modernity typified by reflexivity. Industrial society is based on the distribution of
goods, while that of a risk society on the distribution of 'bads' or dangers. Part
one is concerned with 'living on the volcano of civization: the contours of the risk
society; part two looks to the individualization of social inequality: life forms and
the demise of tradition; and part three explores reflexive modernization: the
generalization of science and politics.

Berman, M. (1983) All That is Solid Melts into Air. The experience of modernity,
London: Verso. 320 pages. Very influential reading of modernity (changing social
and economic realities) and modernism in art, literature and architecture.

Bernstein, R. J. (1991) The New Constellation. The ethical-political horizons of

modernity/post-modernity, Cambridge: Polity. 358 pages. Exploration of
modernity / post-modernity as a pervasive mood (a Stimmung). Exploration of
thinkers such as Heidegger, Derrida, Foucault, Derrida, Rorty and Habermas.

Callinicos, A. (1989) Against post-modernism: a Marxist critique, Cambridge: Polity

Press. Excellent critique of ‘post-modern’ thinking.

Giddens, A. (1990) The Consequences of Modernity, Cambridge: Polity Press. 186 +

xii pages. Giddens argues that we are living in a period of 'high' rather than 'post'
modernity. Examines themes of security versus risk; and trust versus risk.
Harvey, D. (1990) The Condition of post-modernity. An enquiry into the origins of
cultural change, Oxford: Blackwell. 378 + xii pages. Controversial and refreshing
critique of post-modernity - with a concern for economic and cultural
transformations. Part one deals with the passage from modernity to post-
modernity in popular culture; part two with political-economic transformation;
part three with the experience of space and time; and part four with the
condition of post-modernity.

Jameson, F. (1991) post-modernism. Or, the cultural logic of late capitalism,

London: Verso. 460 pages. Key text exploring Jameson's position.

Jameson, F. (1998) The Cultural Turn. Selected readings on the postmodern 1983 -
1998, London: Verso. 128 pages. Good collection of pieces that provide an
introduction to Jameson's pivotal work around post-modernism.

Lash, S. and Friedman, J. (eds.) (1992) Modernity and Identity, Oxford: Blackwell.
379 pages. Useful collection exploring post-modernity as not the 'end of the
subject' but the transformation and creation of new forms of subjectivity. Part
one deals with cosmopolitan narratives; part two with representation and the
transformation of identity; part three with spaces of self and society; and part
four looks to modernity and the voice of the other.

Lyotard, J-F. (1984) The Postmodern Condition: A report on knowledge,

Manchester: Manchester University Press. 110 + xxv pages. Translation of
Lyotard's very influential 1979 work. Looks at the status of science, technology
and the arts, the significance of technocracy, and the way and flow of information
are controlled in the Western world. Explores legitimation, language games,
modernism, the postmodern perspective, narrative and scientific knowledge,
deligitimation, research and education, and postmodern science as the search for
instabilities. An appendix contains an essay on 'What is post-modernism?'

Modernity, post-modernity and education

Briton, D. (1996) The Modern Practice of Adult education. A post-modern critique,

New York: SUNY Press. 156 + xiv pages. Challenges depoliticized notions of adult
education and argues for a 'postmodern pedagogy of engagement'.

Edwards, R. (1997) Changing Places? Flexibility, lifelong learning and a learning

society, London: Routledge. 214 + x pages. Edwards looks at some of the key
discourses that he claims have come to govern the education and training of
adults. He looks at the context for such changes and their contested nature. The
focus is on how the idea of a learning society has developed in recent years. The
usual trip through postmodern thinking is followed by an analysis of the ways in
which specific discourses of change have been constructed to provide the basis
for a growing interest in lifelong learning and a learning society.

Giroux, H. (1997) ‘Crossing the Boundaries of Educational Discourse: Modernism,

post-modernism, and Feminism’ in A. H. Halsey, H. Lauder, P. Brown and A. S.
Wells (eds.) Education: Culture, Economy, and Society, Oxford: Oxford University
Press.

Usher, R., Bryant, I. and Johnston, R. (1997) Adult Education and the Postmodern
Challenge. Learning beyond the limits, London: Routledge. 248 + xvi pages. Follow
up to Adult Education as Theory, Practice and Research, this book focuses on the
changing contexts of adult learning and the need to go 'beyond the limits' of
certain current adult education orthodoxies. Examines adult learning in post-
modernity; citizenship; governmentality and practice; knowledge-power; self and
experience; theory-practice; and research in adult education.

Usher, R. and Edwards, R. (1994) post-modernism and Education, London:

Routledge. 246 + x pages. Examines key writers like Lacan, Derida, Foucault and
Lyotard. Looks particularly to the self/subject.

Also mentioned

Bauman, Z. (1992) Intimations of post-modernity, London: Routledge.

Bell, D. (1973) The Coming of Post-Industrial Society, London: Heinemann.

Cohen, P. (1997) Rethinking the Youth Question: Education, Labour and Cultural
Studies, London: Macmillan.

Hall, S. (1996) ‘The meaning of New Times’ in D. Morley and K-H Chen (eds) Stuart
Hall: Critical Dialogues in Cultural Studies, London: Routledge.

Kumar, K. (1997) ‘The Post-Modern Condition’ in A. H. Halsey, H. Lauder, P. Brown

and A. S. Wells (eds.) Education: Culture, Economy, and Society, Oxford: Oxford
University Press.
Lash, S. and Urry, J. (1987) The End of Organised Capitalism, Cambridge: Polity
Press.

Layder, D. (1994) Understanding Social Theory. London: Sage Publications.

Leonard, P. (1997) Postmodern Welfare: Reconstructing an Emanicipatory Project,

London: Sage Publications.

Smith, M. K. (1994) Local Education: Community, conversation, praxis,

Buckingham: Open University Press.

Acknowledgement: picture: Guggenheim Museum, MYC - photographed by Matt

Ryall - in public domain - Creative Commons Attribution 2 license [Flickr]

Modernist and Pre-modernist Explanation in Economics

Science likes to imagine that it has vanquished religious approaches to the world,
but it remains vulnerable to religious criticism precisely because it remains
religious in important respects. The idea that truth is singular, rather than
potentially plural, that it is non-arbitrary, and that it is meaningful – all of these
dogmas amount to a survival, in the heart of science, of an essentially religious,
pre-modern, approach to the world. The silly, post-modern-inspired argument
that science, as one more interpretation of the world, stands on equal footing
with religious interpretations, can thus (for different reasons than it imagines: the
pre-modernism that clings to science is anti-science, not its essence) gain a
foothold. To avoid confusion with religion, science needs to shed its vestigial
religiosity and achieve its modernist potential. As Shakespeare knew, reality is “a
tale told by an idiot, signifying nothing” – divine or otherwise: it is not an allegory
for God – pre-modern science gets that right – but neither is it an allegory for
Nature, or Reason or Progress, for Fitness or Complexity or anything else.
Pre-modern Science: Smith and Coase on Smith
Smith’s concept of The Invisible Hand, many have argued, has roots in theology.
And in general it is easy to find passages in Smith that seem to rely on the notion
of a divinely-ordained harmony in the world. In his essay, “Adam Smith’s View of
Man1,” Ronald Coase argues, contra Jacob Viner, that Smith’s views on psychology
in The Theory of Moral Sentiments do not, despite appearances, have theological
underpinnings. Smith, says Coase, in showing “that particular characteristics of
human beings which were in various ways disagreeable were accompanied by
offsetting social benefits2,” did not typically appeal to a divine harmony as an
explanation. I think he makes a persuasive case in this regard. Smith appeals not
to God but to Nature as the well-designing author of our harmonious-despite-
appearances psychology. Coase goes on to say that, in this respect, Smith was
essentially an evolutionist before his time: “In all these cases nature, as Adam
Smith would say, or natural selection, as we would say, has made sure that man
possesses those properties which would secure the propagation of the species.
(emphasis added).3”
Examine this astonishing statement. To vindicate Smith’s scientific credentials,
Coase assimilates a patent providentialism to modern science! What is the
difference that makes a difference between an evolutionist providentialism and a
divine one? And yet, of course, to this day evolutionary theory is marred by such
providentialism – a thoroughly anti-scientific excrescence. The idea that
evolution promotes the good of the species is more or less gone, thankfully –
though it had a long run. But the idea that evolution promotes the good of the
organism is alive and kicking. The fact that Darwin himself, in his theory of sexual
selection, rejected this more subtle species of providentialism, has not prevented
its remaining intact in biology until fairly recently. But we still have prominent
evolutionists trying to explain the human brain, human art and science, human
morality, by appeal to the survival value of these innovations – and rejecting more
or less out of hand explanations that fail to identify such survival value.
The history of the reception of the theory of sexual selection in biology, recently
well recounted by Geoffrey Miller in his book, The Mating Mind4, is a case study in
the struggle of the pre-modern and the modern in science, and can serve as a
preliminary to a more general discussion of the elements of what I am calling
modernist explanation. This will be followed by an account of the struggles of
modernism in that most pre-modern of sciences, economics, culminating in a
claim that the real scandal that Keynes’ work represented for the discipline was
its modernism.
Sexual selection, especially the idea of runaway sexual selection developed by H.
A. Fisher in 19305, makes clear in a startling way that adaptive traits may hinder
the organism’s chances of survival. The peacock’s tail, famously, reduces the
peacock’s chances of survival but increases the chances that its genes will spread
by making it more attractive to mates. A providentialist may still take solace in the
thought that the female preference for long tails remains unexplained, but here is
where, in its runaway version, sexual selection becomes strikingly modern, in my
terms: the female preference for long tails, so the theory goes, can be self-
justifying. If enough females have a bias toward longer tails in mates, the
preference for longer tails will be adaptive, by leading to offspring with longer
tails who will be preferred as mates! Certain conceptions of science, those I am
calling pre-modern, find this sort of theory prima facie absurd. It opens the door,
patently, to arbitrariness and indeterminacy and unpredictability: why not short
tales? The ground starts to slip out from under the explanation: how can a
“scientific” explanation make something, in effect, its own cause? And
providentialism is obviously shaken to its roots by this sort of thinking, Miller
summarizes the reaction to Fisher of the famous biologist Julian Huxley: “He
defined evolutionary progress as ‘improvement in efficiency of living’ and
‘increased control over and independence of the environment’. Since sexual
ornaments had high costs that undermined survival chances and did not help an
animal cope with a hostile environment, Huxley viewed them as anti-progressive,
degenerate indulgences6.” Huxley was not unique: sexual selection, which Darwin
regarded as equally as important as natural selection, did not enter the
mainstream of biological thinking until more than 100 years after Darwin wrote –
until the 1980's.
The Modern
The modernism I want to discuss finds its proper antonym not in the post-
modern but in the pre-modern or traditional. The sense I intend is most
adequately delineated in Marshall Berman's All That Is Solid Melts Into Air: The
Experience of Modernity7, an enormous and sui generis piece of scholarship. The
hallmarks of modernism I want to focus on are, first, the subsumption of ends by
means, and, second, closely related, the ubiquity of self-reference. An example
will clarify. How does modern art differ from pre-modern art? One important
way, surely is that for a good deal of the former, art is not the transparent means
to an end outside itself, mimesis or representation, but instead becomes its own
subject--art about art, art for its own sake, etc. So art, traditionally the means of
representing the world, now seeks to represent its own activity--the end has been
subsumed by the means in some sense--and self-reference, with its associated
paradoxes invariably moves center stage. An associated idea is that of bootstrap
phenomena. Bootstraps, as in "pulling oneself up by one's own" are self-
generated or self-caused phenomena. Modern thinking spurns foundations: think
of Sartre's notion that man's essence is to have no essence, to be condemned to
be free and forced to create his own meaning, willy-nilly. The absence of external
foundations, theological or otherwise, makes modernity both exhilarating and
terrifying. It would fill reams and reams of paper to do justice to all the ways in
which the theme of means become ends, and the associated themes of self-
reference and bootstrapping, are played out in area after area of modern thought
and thought about the modern.
I don't intend these three elements to capture the richness of Berman's
argument, but I believe they are central to modernism in the sense he uses it,
although in no way exhaustive of that sense. Summing up his argument, he
writes:
To be modern . . . is to experience personal and social life as a maelstrom, to
find one's world and oneself in perpetual disintegration and renewal.

Examples of "Modernist" Explanation

How and where do we see modernism in this sense in scientific explanation?

What follows surveys the ground with a collection of examples, some of which
will be further elaborated in later sections.
1. Asset Bubbles: Why does an asset have a high price today? Because it is
expected to have an even higher price tomorrow. Alternatively, why does an asset
have a low price today? Because it is expected to have an even8 lower price
tomorrow. (See Keynes’ famous Ch. 12 in the General Theory , on the stock
market as beauty pageant.)
2. Increasing Returns: Suppose that there is a positive externality associated with
investment, so that the greater the level of aggregate investment, the higher the
average level of return on investment. (Investment in knowledge may have this
characteristic). Then we can ask, why is the level of investment so high? Because
the rate of return on investment is high. But why is the rate of return on
investment high? Because the level of investment is high. Alternatively,--in the
same economy, same fundamentals-- why is the level of investment so low?
Because the rate of return on investment is low. And why is that? Because the
level of investment is low. (See Weill, Phillipe, "Animal Spirits and Increasing
Returns”9).
3. Conventions: Why do you, an American, drive on the right side of the road?
Because you expect others to do the same. Why do others do so? Because they
expect you and others to do so as well. Collectively, then, we drive on the right
side of the road because we drive on the right side on the road. Alternatively, why
do you, an Englishman, drive on the left side of the road. Because you expect
other English people to do the same, etc.
4. Money: Why do you give up real goods and services for worthless pieces of
paper? Because you expect others to give you (different) real goods and services
for the paper in turn tomorrow. Alternatively--same fundamentals--why do you
refuse to give up real goods for worthless pieces of paper? Because you expect
others to refuse as well10.
5. Co-evolution: Why does animal A have such long, sharp teeth? Because animal
B, its prey, has such a hard carapace. Why does animal B have such a hard
carapace? Because animal A, its predator, has such sharp teeth. Alternatively--
same fundamentals--why does animal A have such short, dull teeth. Because
animal B, its prey, is so soft and mushy. Why is animal B so soft and mushy?
Because animal A, its predator, has such short, dull teeth. (See Sigmund, Games of
Life, on co-evolution.11)
6. Runaway Redux: Why is the peacock's tail so long. Because long tails are
preferred by females, so the low survival value is offset by the increased chance
of mating. But why do females prefer long tails? Because, given a substantial
group of females in the population who prefer long tails, a female with a gene for
preferring long tails will also carry the gene for long tails. Its offspring will thus do
better reproductively.
7. Leijonhufvud’s Keynes: Imagine saving and investment curves as functions of
the interest rate. Saving is saving out of full employment income. The intersection
determines the Wicksellian natural rate of interest. The investment curve shifts
back. The natural rate of interest falls. But bear speculators with inelastic
expectations sell bonds to prevent the adjustment. They expect the rate of
interest to remain at the old level. Their action leads to a positive gap between
full employment saving and investment, a shifted-in saving function due to falling
income, and an equilibrium rate of interest higher than the new natural rate
which will now prevail even without speculation. The bears are proved correct.
Their expectations that the interest rate would not fall have been confirmed, for
the nonce. This is Keynes as interpreted 12by Axel Leijonhufvud in On Keynesian
Economics and the Economics of Keynes . Why is the rate of interest so high?
Because it was expected to be high.
8. 19th Century Capitalism: How can the level of investment be so high while the
level of consumption is so low? Means of Production are being produced today to
be used to produce means of production tomorrow etc. -- the means have
become ends. Alternatively, a low level of investment might make sense despite
robust consumption if the level of investment will be low tomorrow -- the means
of production needed for the consumption goods industry is high, but the means
of production needed to produce means of production are low.
So modernist explanations, I shall stipulate, are characterized by:
a. The ubiquity of self-reference : X because, ultimately, X.
b. No appeal to fundamentals: God, providence, Reason, Efficiency, Fitness.
c. The reversal of means/end relationships. Means become ends in
themselves.
d. Bootstrapping phenomena, as in "pulling yourself up by your own" As a
consequence, arbitrariness, and multiple equilibria.

Modernism on the Fringe: Marx

In economics, the locus classicus of modernism, indeed the source--in the
Manifesto-- of the phrase Berman uses as the title of his book, is the work of Karl
Marx, definitely far out of the mainstream. Marx, throughout his writing, returns
again and again to the essential difference between a pre-modern economy of
small producers where, in his well-known terminology, exchange proceeds
according to the transparent schema C-M-C' (a commodity of one type, C, is
exchanged for money, M, which is in turn used to purchase a different commodity
C'), on the one hand; and the modern capitalist economy, whose dynamism
springs from its obedience to a diametrically opposed schema: M-C-M', on the
other. Here, money purchases commodities (labor and raw materials) which are
fashioned into goods to be sold for still more money, so that the process can
begin again. Unlike the first, this second process has no natural stopping point,
and no foundation or rationale outside of itself, in some pre-existing human
needs, the need to satisfy which begins and the satisfaction of which ends the
exchange process in the first schema. The mere means in the first schema,
money, has become the end in the second. And what is the money for? To create
more money. Thinking about the second schema, we experience the same
dizziness, the same hall-of-mirrors effect that I would argue characterizes the
modernist turn in all areas of life and culture. (I think of this modernist experience
as the Land 'O Lakes effect, after the butter box of my youth, which pictures an
Indian woman holding a box of butter, on which is pictured an Indian woman
holding a box of butter, on which is pictured . . .) Marx's most succinct definition
of capital captures this modernist theme beautifully. He calls capital "self-
expanding value". Again we have a self-referring infinity in which means has
become end: value creating value creating value . . . . Our pre-modern,
traditionalist, religious inclination is to ask "to what end?" and to feel frustrated
by our inability to get an answer.
Marx argued that to represent the modern capitalist economy as, underneath the
trappings of a sophisticated financial system and a highly complex division of
labor, nothing but a barter economy operating according to C-M-C', a giant means
to satisfy the end of human consumption, was a huge mistake. He raged against
the "Robinsonades" of the classical economists -- their attempts to explain the
workings of a modern capitalist economy by telling stories about Robinson Crusoe
solving his economic problem (the economic problem) all alone on his desert
island. The idea that capital, the dynamic process of self-expanding value whose
revolutionary consequences Marx documented, could be understood by analogy
with the fishing net that Robinson sacrificed some potential fish today to
construct, in order transparently to increase his fish consumption tomorrow --
Marx found absurd and laughable. On the contrary, the capitalism he saw and
described was just as capable of producing means of production today to increase
the capacity for producing means of production tomorrow, which in turn would
make possible further means of production ad infinitum--to produce for
production's sake, as it were. The economic world he described, in other words,
was a modern economy, not the pre-modern and traditional economy of a
Robinson Crusoe. To miss this distinction, Marx would have said, is to miss, in
effect, everything.
Thoroughly Modern Maynard
Prior to Keynes, however, the mainstream of the profession did miss this
distinction, and, despite Keynes, still in large part does. What are the
"representative agent " models so beloved of modern macroeconomists, real
business cyclists and others, if not hi-tech Robinsonades?
I believe Keynes' modernism was pervasive. Its most obvious manifestations,
however, can seem at first sight fairly isolated in his work, and have been so
treated by his interpreters. The Keynesian who believes Keynes' message to have
been well captured in the Hicksian ISLM apparatus has very little use, it would
seem, for Keynes' brilliant Chapter 12 in The General Theory, "The State of Long-
term Expectation"13. Here is Keynes' oft-cited discussion of the Stock Market, of
Infinitely-lived Asset valuation in general. The modernism of this chapter is hard
to miss. Here we are asked to contemplate the bootstrap character of the
valuation of an open-ended asset whose price today depends on dividends it is
expected to pay, to be sure, but also on the price it is expected to have tomorrow,
which latter price will depend on the price it is expected to have further on in the
future, and so on ad infinitum. Keynes' asks us to take seriously the notion that
the asset's price may very well lose any connection with the "solid" fundamentals
and become an airy bubble of self-fulfilling expectations. It is important to see,
too, that such an essentially modernist phenomenon Keynes regards not as
temporary and bound to disappear just as soon as professionals -- investors
knowledgeable about the fundamentals -- appear on the scene, but as
comparatively long-lasting and immune to arbitrage:
This battle of wits to anticipate the basis of conventional valuation a few
months hence, rather than the prospective yield of an investment over a
long term of years, does not even require gulls among the public to feed
the maws of the professionals; -- it can be played by professionals among
themselves.

Nor is it necessary that anyone should keep his simple faith in the
conventional basis of valuation having any genuine long-term validity. For
it is so to speak a game of Snap, of Old Maid, of Musical Chairs--a pastime
in which he is victor who says Snap neither too soon nor too late, who
passes the Old Maid to his neighbor before the game is over, who secures a
chair for himself before the music stops. These games can be played with
zest and enjoyment, though all the players know that it is the Old Maid
which is circulating, or that when the music stops some of the players will
find themselves unseated.14
In contemporary terms, Keynes is talking in this passage about "rational
bubbles".15 They are rational because there is no assumption of stupidity on the
part of purchasers of the bubbled asset, stupidity that a canny professional might
profit from--and by doing so burst the bubble. The bubbled asset provides a
normal return in expectation, with the bubble itself growing at the rate of return,
and therefore passes a no-arbitrage or efficient markets test, no matter how
wildly divergent from fundamentals its price becomes, and is destined
increasingly to become.
Only an infinitely-lived agent could undo, via arbitrage, a bubble on an infinitely-
lived asset, which fact puts Keynes' reminder that "in the long run we're all dead"
in a whole new light! It is somewhat ironic that the development of rational
expectations, a development that in its early stages was used as a battering ram
against Keynesian economics, enables us to understand the bootstraps and
bubbles of Chapter 12 Keynes with much greater depth and clarity than we could
before. The determination of the present not by the past but by the unknown
future -- via expectations -- can never be grasped, with all its dramatically
modernist implications for our economic lives, as long as we reduce expectations
about the future, by means of an adaptive expectations scheme, to some
determinate function of the past. Rational expectations -- honestly deployed --
can be a potent generator of modernist outcomes: unfortunately, this is usually
noted, if at all, in the footnotes, where one finds the specious arguments for
ignoring all but the fundamental solutions covered in the main text.
It is important to see that Keynes, despite twinges of pre-modern revulsion which
lead him to propose at one point, half-seriously, that we marry the asset to the
asset-holder for life, to defeat speculation and thus the melting of all that is solid
into air -- ultimately felt that bubbles could not be disposed of so easily: “This is
the inevitable result of investment markets organised with a view to so-called
liquidity.”16
Contemporary thinkers who have carried on and developed Keynes' modernist
views of asset bubbles find the profession scarcely more receptive than it was and
is to Chapter 12. The pre-modernism of the profession lies very deep: Look, for
one example, at the vehemence of the reaction to Robert Shiller's 1981 article on
Stock Market volatility, work directly in the tradition of Chapter 12.17 In a
symposium on bubbles in the Journal of Economic Perspectives of a few years
back, we find one participant arguing quite seriously that the Great Tulip Mania in
17th century Amsterdam--what Sadam Hussein might have called the Mother of
All Bubbles, on previous accounts -- can be parsimoniously explained as a
response to changes in fundamentals!18
But I have argued that modernism is pervasive in Keynes, not a phenomenon
confined to a chapter here or there. Here, I want to suggest that we broaden our
minds about the Keynesian message and remember, above all that his work
stands in two traditions simultaneously, both the mainstream, and the
underground, heretical tradition of underconsumption theorists, numbering
among its members thinkers such as Marx, Hobson, Major Douglas and Malthus19
-- some of whom Keynes explicitly acknowledges as progenitors in his appendices
to the General Theory. The common vision of this latter tradition is the one I have
identified in Marx, of a modern capitalist economy subject to stagnation because
its ability to produce outruns its ability to consume: the modernist possibility of
production for production's sake is here taken very seriously indeed.
Moderns and Pre-Moderns: Keynes, Robertson, and Our Grandchildren
The modernist impulse in Keynes can be observed in the reaction it provoked in
his anti-modernist contemporaries. A small but symptomatic incident provides an
illustration. Keynes' theory of liquidity preference contained the modernist idea
that what determines the interest rate today is speculator's expectations of what
it will be tomorrow. This couldn't be the end of the story, D. H. Robertson20 and
others (Leontief, famously) insisted: Where were the fundamentals of the
process? Robertson's reaction was vehemently anti-modernist:
Thus the rate of interest is what it is because it is expected to become other
than it is; if it is not expected to become other than it is, there is nothing
left to tell us why it is what it is. The organ which secretes it has21been
amputated, and yet it somehow still exists--a grin without a cat.
Robertson is not alone among economists in thinking that to establish the
bootstrap, foundation-less character a theory attributes to an economic
phenomenon is ipso facto to refute that theory. Alice in Wonderland is one
thing; reality cannot have this airy character. If your theory tells you it does, it
must need work. As with under-consumption, I cite this aspect of Keynes as an
instance of his attraction to modernist explanations. I don't mean to condition
my argument on an acceptance of the speculative demand for money any more
than on the acceptance of, say, Alvin Hansen's Keynesian Stagnationism. There
are contemporary theories of the interest rate which inherit from Keynes the
modernist form without the particular content he filled it with.
Keynes himself, like many another great modernist, combines his modernist
description with a deep anti-modernist revulsion at the prima facie absurdity of
the phenomena he is transcribing and, in his weaker moments, with what
amounts to a pious hope for an overcoming of modernism and a return to a pre-
modern golden age where means have been put back in their place as means to
independent ends to which they are transparently related, where bubbles have
burst and social life, as it were, makes sense again. (Berman, by the way finds
some of these same tendencies in the arch-modernist Marx, who seems
sometimes to hold up a vision of socialism as a rest from the ceaseless flux, an
overcoming, indeed, of history, a putting-paid to the ceaseless, permanent
revolution of modern life.)
This modernist/anti-modernist dialectic in Keynes is most apparent in his 1930
essay, "Economic Possibilities for our Grandchildren"22, where he contrasts the
"purposiveness" of contemporary economic life with its potential overcoming in
the lives of our grandchildren. The former idea represents still another ringing in
Keynes' work of the by now familiar modernist changes. The purposive man, he
says:
 is always trying to secure a spurious and delusive immortality for his acts by
pushing his interest in them forward in time. He does not love his cat,
but his cat's kittens; nor, in truth, the kittens but only the kittens' kittens;
and so on forward forever to the end of cat-dom. To him23jam is not jam
unless it is a case of jam tomorrow and never jam today.
But after describing and dissecting this modernist purposiveness--interestingly
named since it seems almost paradigmatically anti-purposive to pre-modern eyes-
-Keynes sounds an almost religious anti-modernism. The purposive era will one
day end ("when science and the power of compound interest " have solved the
economic problem!). And in this future made possible precisely by virtue of the
abundance obtained through centuries of purposiveness:
We shall once more value ends above means and prefer the good to the
useful. We shall honor those who teach us to pluck the day virtuously and
well, the delightful people who are capable of taking direct enjoyment in
things, the lilies of the field, who toil not, neither do they spin.24
But Keynes, unlike the great majority of the economics profession in his day and
our own, did not allow his anti-modern hopes and values -- delusive or not -- to
interfere with his ability to limn the modernist reality in which we live and
breathe. The modernist present is highlighted and set off by the stark contrast
with the imagined anti-modernist future.
Keynes' modernism is, I believe, the most deeply interesting and at the same time
has proven so far the least assimilable dimension of his legacy to the economics
profession.
L’Envoi
Taking the contra-positive formulation of Nietzsche’s famous declaration, if
everything is not permitted, then God is not dead. A determinist science, science
that recoils from arbitrariness and meaninglessness, that doesn’t permit, in
principle, everything, that only counts as explanations the pre-modernist subset –
keeps God alive, and its adherents children.
Notes

1. Coase, Ronald, 1994. Essays on Economics and Economists. University of

Chicago Press, Chicago: 95-118.
2. Ibid: 107.
3. Ibid: 109.
4. Miller, Geoffrey, 2000. The Mating Mind. Doubleday, New York.
5. Sigmund, Karl, 1993. Games of Life. Oxford University Press, New York: 128-31.
6. Miller, op. cit: 58.
7. Berman, Marshall,1982, All That Is Solid Melts Into Air, Penguin Books, New
York.
8. Keynes, J. M., 1965, The General Theory, Harbinger, New York.
9. Weill, Philipe, 1989."Animal Spirits and Increasing Returns.” American Economic
Review: September.
10. See Wallace, Neil, 1980. "Overlapping Generations Models of Fiat Money" in
Models of Monetary Economies. Federal Reserve Bank of Minneapolis.
11. Sigmund, op. cit.: 148, et seq. , on co-evolution.
12. Leijonhufvud, Axel, 1968. On Keynesian Economics and The Economics of
Keynes. Oxford University Press, London.
13. Keynes, J. M., 1965, The General Theory, Harbinger, New York: 147-164.
14. Keynes,1965, op.cit.,p.155.
15. See Blanchard, Olivier and Stanley Fischer (1989), Lectures on
Macroeconomics, MIT Press, Cambridge, Chapter 5, for a good discussion of this
literature. Chapter 5 is titled "Multiple Equilibria, Bubbles and Stability", and it sits
uncomfortably in the text, an apparent swerving away from the main track (which
of course it is). The last sentence of the chapter states ". . . though we find the
phenomena analyzed in this chapter both interesting and disturbing, we are
willing to proceed on the working assumption that the conditions need to
generate stable multiplicities of equilibria are not met in practice". So it's goodbye
to bubble solutions from then on. I wonder how many syllabi in courses that use
the text leave this chapter out?
16. Ibid, emphasis added.
17. Shiller, Robert,(1989), Market Volatility, MIT press, Cambridge, contains the
original article along with Shiller's responses to the veritable cottage industry of
critics which grew in its wake. The article is "Do Stock Prices Move too Much to be
Justified by Subsequent Changes in Dividends", American Economic Review 71
(1981): 421-35, and appears as Chapter 5 of Market Volatility.
18. Garber, Peter, (1990), "Famous First Bubbles", Journal of Economic
Perspectives 4: 35-54.
19. See Bleaney, Michael, Underconsumption Theories, (1976), International
Publishers, New York, for an excellent overview of this tradition.
20. Robertson, D. H.,(1940), "Mr. Keynes and the Rate of Interest" in Essays in
Monetary Theory, Staples Press, London:1-38.
21. Ibid.: 25.
22. In Keynes, (1963), Essays in Persuasion, Norton, New York: 358-373.
23. Ibid: 370.
24. Ibid: 372.

The Last Throes of PoMo Macro?

That is to say, is Post-Modernist Macroeconomic Policy over?

" ....Postmodernism is largely a reaction to the assumed certainty of scientific, or

objective, efforts to explain reality. In essence, it stems from a recognition that
reality is not simply mirrored in human understanding of it, but rather, is
constructed as the mind tries to understand its own particular and personal
reality. For this reason, postmodernism is highly skeptical of explanations which
claim to be valid for all groups, cultures, traditions, or races, and instead focuses
on the relative truths of each person. In the postmodern understanding,
interpretation is everything; reality only comes into being through our
interpretations of what the world means to us individually. Postmodernism relies
on concrete experience over abstract principles, knowing always that the
outcome of one's own experience will necessarily be fallible and relative, rather
than certain and universal.

Postmodernism is "post" because it is denies the existence of any ultimate

principles, and it lacks the optimism of there being a scientific, philosophical, or
religious truth which will explain everything for everybody - a characteristic of the
so-called "modern" mind. ..."

From Ron Suskind, "Faith, Certainty and the Presidency of George W. Bush," NY
Times Magazine, Oct. 17, 2004.

'The aide said that guys like me were "in what we call the reality-based
community," which he defined as people who "believe that solutions emerge
from your judicious study of discernible reality." I nodded and murmured
something about enlightenment principles and empiricism. He cut me off. "That's
not the way the world really works anymore," he continued. "We're an empire
now, and when we act, we create our own reality. And while you're studying that
reality -- judiciously, as you will -- we'll act again, creating other new realities,
which you can study too, and that's how things will sort out. We're history's
actors . . . and you, all of you, will be left to just study what we do."'
I'm not the first person to comment on the PostModernist tendencies of this
Presidency -- see in particular Josh Marshall's 2003 Washington Monthly article,
"The Post-Modern President". However, I think this might be among the first to
systematically dissect the post-modernist aspects of this Administration's
macroeconomic policies. I'll tackle these points in turn.

 Do tax cuts increase tax revenues?

 Is more financial deregulation always better?
 Macroeconomic aspects of energy policy.
 Do budget deficits have an effect on current account deficits?

Do tax cuts increase tax revenues? This topic has recently been in the news, with
Bruce Bartlett's recent op-ed recounting the success of supply side economics,
while disavowing the view that tax revenues would rise in response to a tax rate
decrease (see the debate at Economists View [1], [2], [3], Brad Delong [4], and
Angry Bear [5]). It is nonetheless important to recall that some people -- including
the Vice President -- still believe that the response of tax revenue to decreases in
marginal tax rates is very substantial. This in turn leads to there fervent belief that
dynamic scoring would lead to big changes in how "good" tax cuts would look
from a fiscal perspective. Yet, the CBO's recent analysis of the President's budget
request has a little remarked-upon section (Table 2-1) which examines how CBO's
baseline, and models accounting for supply side effects, would differ from the
OMB forecast.
Table 2-1 from CBO, An Analysis of the President's Budgetary Proposals for Fiscal
Year 2008, March 2008.

What is remarkable is how little the textbook supply side model response, with
high responsiveness to tax changes, differs from the CBO's baseline. The open
economy change is -$496 billion cumulative change (2008-2012), versus the CBO's
standard model estimate of -$507 billion. In other words, it's a cumulative
difference of $11 billion, or roughly $2.2 billion in a projected 2012 economy of
$17.2 trillion (i.e., 0.01% of GDP in 2012).

Some might object, saying these are "just models". Let's look to the surging tax
revenues in FY'06 and FY'07. I'll ignore the declining state tax revenues, and re-
iterate the fact that the surge in revenues is well within the two standard error
bands. In any case, the CBO's estimate of standardized/cyclically adjusted Federal
tax revenues in FY'07 is still 1.4 percentage points of GDP lower than it was in
FY'00.
Figure 1: Standardized Federal government revenues as a proportion of GDP,
fiscal years. Source: CBO, Cyclically Adjusted and Standardized Budget Measures,
February 2007.

By the way, there is even doubt whether tax cuts increase GDP in the long run, a
separate issue from whether tax receipts increase. The answer depends critically
upon how the tax cuts are financed. This is discussed in the Treasury's report,
even though -- as recounted in my post on the subject -- this fact is often omitted
from arguments of the proponents of dynamic scoring.
Is more financial deregulation always better?

Figure 2: Enron share prices. Source: [1]

Figure 3: Annual growth rate in OFHEO Housing Price Index and in index of
transactions prices. Source: OFHEO March 1st release.

Most economists would agree that when markets are competitive (in the
textbook sense) and information is perfect (so that agents on both sides of the
transaction have the same information set), regulation is usually
counterproductive. However, when information is asymmetric -- so that for
instance lenders and borrowers have access to different information sets
regarding motives, assets and liabilities -- then regulation may be a second best
way of managing what would otherwise be disappearing markets, or situations
where the government is forced to enter in to bail-out systemically important
sectors.

What was the role of the Bush Administration's ideology in this lack of regulatory
fervor? Apparently, it was to some extent important:

"What is really frustrating about this is [federal regulators] don't have

enforcement authority to do anything with these state-licensed, stand-alone
mortgage lenders," says Fed Reserve Governor Susan Bies.

Yet even where federal regulators have jurisdiction, they sometimes have been
slow to grapple with the explosive growth in especially risky practices and quick to
shield federally regulated banks from states and private litigants. The underlying
belief, shared by the Bush Administration, is that too much regulation would stifle
credit for low-income families, and that capital markets and well-educated
consumers are the best way to curb unscrupulous lending.

The article continues:

Public disciplinary actions by federal bank regulators are rare. In the past two
years, the FDIC has issued four cease-and-desist orders against subprime lenders
that required the companies to change their practices. The Fed has issued just
one and the OTS none, the FDIC said. The OCC said it has sanctioned one
subprime lender in that time. Federal regulators say they spot and correct
problems quietly during the examination process before they reach the point
where public enforcement action is needed.

Regulators appointed by President Bush often have been more sympathetic to

industry concerns about red tape than their Clinton administration predecessors.
When James Gilleran, a former California banker and bank supervisor, took over
the OTS in December 2001, he became known for his deregulatory zeal. At one
press event in 2003, several bank regulators held gardening shears to represent
their commitment to cut red tape for the industry. Mr. Gilleran brought a chain
saw.

He also early on announced plans to slash expenses to resolve the agency's

deficit; 20% of its work force eventually left. When he left in 2005, Mr. Gilleran
declared that the OTS had "exercised increased diligence in its review of abusive
consumer practices" while reducing thrifts' regulatory burden. But his successor,
Mr. Reich, a former community banker, has reversed many of Mr. Gilleran's cuts.
Citing "understaffing," he hired 80 examiners last year and plans to add 40 more
this year. A spokeswoman for Mr. Gilleran, now chief executive of the Federal
Home Loan Bank of Seattle, said he wasn't available to comment. ...

Now it would be irresponsible to place the entire blame for the subprime collapse
at the feet of the Bush Administration. Financial innovation -- partly to avoid
regulation -- is a recurring theme in American economic history (see for instance
Mishkin's money & banking textbook). In addition, divided responsibility between
state and Federal authorities is part of the problem. But certainly the
deregulatory zeal could not have been helpful. It is against this backdrop (and the
ongoing discoveries of further financial irregularities in accounting and the
granting of stock options) that I find the current attempt to "reform" Sarbanes-
Oxley puzzling.

Were these financial sector issues restricted in effect to the financial sector, then
my concerns would not have macroeconomic implications. But exactly because
the financial sector plays a central role in allocating capital and monitoring
projects, it's not just another sector. Indeed, as one economist wrote in 1983:

"The present paper builds on the Friedman-Schwartz work by considering a third

way in which the financial crises ... may have affected output. The basic premise
that, because markets for financial claims are incomplete, intermediation
between some classes of borrowers and lenders requires nontrivial market-
making and information-gathering services. The disruptions of 1930-33 ... reduced
the effectiveness of the financial sector as a whole in performing these services.
... "

That economist was Ben Bernanke ("Nonmonetary effects of the financial crisis in
the propagation of the Great Depression," American Economic Review 73(3)).

Macroeconomic aspects of energy policy. As noted previously, the President has

recently argued for dealing with "oil addiction". However, as was also highlighted,
the President's convictions extend only to devoting more resources to R&D and
continuing subsidization of ethanol production. Strangely -- for a President
supposedly devoted to market-based approaches, gasoline -- or energy taxes
more generally -- are nowhere to be seen.
Now, I do not argue that it is either feasible or desirable to hit zero energy
imports. Indeed, even if we were to be net zero oil importers, upward shocks to
oil prices would still put upward pressure on economy-wide prices, thereby
exerting contractionary effects on output. But, it's clear that our present
dependence on imported oil adds another layer of vulnerability to oil price
shocks, insofar as they redistribute income away from the US and to oil exporting
nations. Were those nations to exhibit roughly the same marginal propensity to
consume as do Americans, then the net effect on world output would be small
(some will recognize this as the "transfer problem" discussed by Keynes and Ohlin
in the context of the Treaty of Versailles). But they have not thus far, thus
subjecting the world economy to various imbalances.

Let me lend a personal note to this discussion. As one of the professional staff of
the CEA held over from the Clinton Administration, I had the opportunity to sit in
on some of the meetings of the (staff level) working group of Vice President
Cheney's National Energy Policy Development. While we were admonished to
"think outside the box", one will find absolutely zero mentions of gasoline tax in
that report, as well as the 2006 Economic Report of the President (by the way, this
is why I'm wary of arguments of the sort that assert "the world is different now").
This is true despite the fact that when there are negative externalities, the
standard (neoclassical) economists' response to internalize the externality by way
of taxes. As Jim Hamilton has argued, the way not to go, at least as a first resort, is
via command-and-control means such as CAFE standards. And, to further critique
the Administration's approach to energy policy, it seems foolhardy to subsidize
ethanol production when current oil prices make ethanol production profitable

The impact of the budget deficit on the current account deficit. I've written a lot
on this, so much will be redundant. But it must be said that the White House's
dogged determination that deficits don’t matter is indicative of a general
disregard for empirics. Exhibit one in this regard is internal inconsistencies within
a single chapter of the 2006 Economic Report of the President. As I noted slightly
over a year ago on page 146, it states:

"The interdependence of the global financial system implies that no one country
can reduce its external imbalance through policy action on its own. Instead,
reducing external imbalances requires action by several countries. Specifically, at
least four steps may help to reduce these imbalances."
And yet in Box 6-3 assessing "the link between fiscal and trade deficits", the ERP
authors cite favorably the Fed's estimate of an elasticity between fiscal and trade
deficits of 0.20, directly contradicting the previous statement. I might further
observe that the quote from the 2006 ERP does not jibe with the Treasury's (more
nuanced) Occasional Paper on the topic, entitled The Limits of Fiscal Policy in
Current Account Adjustment. Then the question is how big is the effect; there
reasonable people can differ. My empirical work suggests something between
0.15-0.44. For those skeptical of econometrics, well, between 2000 and 2005,
there was approximately a 4.3 percentage point swing in the Federal budget
balance, and a 2.2 percentage point swing in the current account balance. This
outcome is consistent with a 0.5 coefficient. See also Figure 2 below.

Figure 4: Change in the consolidated government budget balance to GDP ratio,

lagged two years (blue) and change in the current account to GDP ratio (red), on a
NIPA basis. Sources: BEA, NIPA release, February 2007 and author's calculations.

So, confronted with this evidence, will the reign of PoMo Macro be ended? It
should, but there will always be those who will choose ideology over data. For
them, they will continue to construct their own "reality", and so, like in other
dimensions, we have not yet seen the last throes.
1
The History of Political Economy and Post-Modernism
Stavros D. MavroudeasUniversity of MacedoniaDepartment of Economic
Studies156 Egnatia St.P.O.Box 159154006 ThessalonikiGREECEtel.: +30 +31 -
891779fax: +30 +31 - 891750e-mail: smavro@uom.gr
ABSTRACT

The study of the historical creation is dominated by non-neoclassical

andespecially Marxist interpretations. These interpretations focus on
theestablishment of capitalist economies and the subsequent need for
anautonomous scientific theory of economic relations. An explicit social
perspective(through a class theory) underlies this theorization.Contrarily, neo-
classical orthodoxy understands the process of creation of Political Economy as
mere history of economic thought (i.e. a succession of personal contributions with
limited relation to the socio-economic conditions).The relation between economy and
economic theory is theorized through an a-social perspective, since social classes and
politics are excluded andmethodological individualism reigns.Recent post-
modernist interpretations advance a historicist, relativist andpoliticist view. The
reasons for the creation of political economy are to be foundnot in the socio-
economic framework but mainly in the field of the political.This paper criticizes
the post-modernist interpretations from a Marxistperspective and rejects their
arguments as historically unfounded andanalytically infertile.

I. Introduction

If there is a canon in the interpretation of Political Economy, this is providedby

non-neoclassical and especially Marxist views and it is based on an objectivesocio-
historical perspective. Indeed, the study of the historical creation and
thetheoretical substantial content of Political Economy is an area dominated to a
greatextent by non-neoclassical (institutionalist, post-Keynesian, neo-Ricardian,
RadicalPolitical Economy) and particularly Marxist interpretations. There are
importantreasons for this: the main focal points of Political Economy (the primacy
of productionover relations of exchange, Value theory, social classes and the
interrelationshipbetween the economic and the political sphere) have been discarded by
neo-classical Economics in favor of a theory of prices and an economics-of-
exchange
2perspective.
The original Political Economy framework has been retained only bythose
dissenting traditions.These interpretations generally focus on the establishment
of capitalisteconomies and the subsequent need for an autonomous science of
economicrelations. On the basis of these objective foundations of the relation
betweeneconomy and economic theory the construction of Political Economy is
explained. Anexplicit social perspective (usually through a class theory) underlies
this theorization.On the other hand,Orthodox Economics understand the process
of creationof Political Economy as mere history of economic thought, i.e. as a
succession of more or less personal contributions with rather limited relation to
socio-economicconditions. The relation between economy and economic theory
is theorized througha historicist and mainly a-social perspective, since for
Orthodox Economics socialclasses have no relevance, politics are excluded and
methodological individualismreigns.The last decades, and under the diffusion of
influence of the post-modernist trend within social sciences, another line of
interpretation appears to emerge. Thisinterpretation - in contrast to both the
non-neoclassical and Marxist emphasis onsocio-economic factors and the neo-
classical a-social perspective - advances apoliticist, historicist and relativist view. It
is politicist and historicist since agents’actions are considered as almost
indeterminate and history is perceived as totallyunbound and open. It is also
relativist because no causal relations are recognized.Material socio-economic
factors - if theorized at all - are being reduced tomere historical accidents, caused
by concrete historical conjunctures. At the sametime, discursive elements assume
an overarching importance. This is expressed inthe supposed explanatory primacy
of the politics, which are divorced from materialfactors and linked solely to
discourse. Politics are understood as an ideological-cum-semiological terrain and
explain the specific outcome of struggles in concretehistorical conjunctures.
Theory, also, is autonomized from socio-economic evolutionand related to
contingent and subjectivist political influences.This perspective results in a
politicist interpretation of Political Economy,since the reasons for the emergence
of Political Economy are to be found not in thesocio-economic framework but
mainly in the field of the political (Meuret (1988: 225).This paper criticizes the
post-modernist interpretations from a Marxistperspective. The next part gives a
general analysis of post-modernism and in thesocial sciences. The third part
traces the impact of post-modernism in economics.The fourth part argues that
there are important covert links between recent neo-classicist ‘imperialism’ and
post-modernism. The fifth part criticizes post-modernist
 3re-interpretations of the history of Political Economy and their dispute of the
‘canon’of interpretation, believed to be common in all ‘modernist’ approaches
(neo-classicism, Keynesianism, Marxism). This discussion focuses upon Meuret’s
(1988)thesis of the political genealogy of Political Economy, which provides a
powerfulversion of the post-modernist perspective and proposes a re-
interpretation of thecreation of Political Economy. The last part concludes.
Overall, the post-modernistperspective and its attempt to rewrite the history of
evolution of economic thought arecriticized for being historically unfounded and
analytically infertile.
II. Post-modernism and the social sciences Post-modernism as a broad trend in
social sciences – but in culture as well –was borne out of a widespread
disappointment within radical intelligentsia with theend of the ‘high hopes’ of the
1960s. Eagleton (2003) offers a lucid account of thispath that ultimately led to
post-modernism. The retreat of the tide of massmovements and social and
political struggles left only fragmented remnants behind.Furthermore, the
conquests and the theoretical advances of that period, althoughunambiguously
important, proved unable to confront capitalism’s radical restructuringin the
decades after the structural crisis of the 1974-5.Much of this retreat is was self-
inflicted. The 1960s movements had a mainlystudent and middle-class social basis
and appeared in an era of economic prosperitybut also just before the eruption of
a structural crisis. The mixture proved self-defeating. By pronouncing a vociferous
revolutionary rhetoric they set utopianpolitical aims. At the same time they failed
to establish significant roots in thosesocial classes and strata that were less well-
of (usually the working-class) and towhich they appealed. Their verproportionally
universalist theoretical endeavorstogether with unrealistic maximalist politics and
the lack of adequate class bases ledthem to an almost unconditional retreat once
capitalism’s crisis (which theyprofessed) truly erupted. Faced with the system’s
unremitting and far-reachingrestructuring attempts they offered no significant
resistance. Furthermore, the comingof hard times for the great mass of the
working population made even bigger the gapbetween it and the maximalist
political and theoretical rhetoric of those student andmiddle-class
movements.This, instead of causing a far-reaching self-critique, led a significant
segmentof the radical intelligentsia to deep disappointment and the almost
complete overturnof its previous positions. As (Eagleton (2003: 51)) very
accurately points out, ‘after the debacle of the late 1960s, the only feasible
politics seemed to lie in piecemeal resistance to a system which was here to stay’.
The system could be disrupted butnot dismantled.This sense of disappointment
led to post-modernism. Rejection of anyuniversal analysis, disbelief in the
possibility of any social overturn, retreat to smalland fragmented issues together
with an intellectually amusing (sometimes) butsocially and politically irrelevant
aesthetic sarcasm are its hallmarks.Post-modernism’s main thesis is that there
cannot be objective criteria for assessing the truth. There can be many different
analyses and all these are equallylegitimate. The reason for this is that there
cannot be a separation between what is tobe explained (signified) and its
explanation (signifier). For the more extreme post-modernist versions, reality
does not exist on its own but only as its conception byhumans. For the more
qualified versions, reality might exist independently but this isirrelevant to
humans. Moreover, different explanations shape different ‘realities’.
Allknowledge is partial, limited and contingent. Thus, grand theories
1
are irrelevantsince the interplays between signifiers and signifieds are so many and
diverse. Thisthesis is supplemented with an explicit lack of faith in the capacity of
human reasonto reach universal explanations. Lyotard (1984: xxiii) criticizes
sciences for tending tolegitimize themselves with reference to some
metadiscourse or ‘grand narrative’,such as the dialectics of Spirit, the
hermeneutics of meaning, the emancipation of therational subject or of the
working class, or the creation of wealth. In contrast, hedefines post-modern as
‘incredulity towards metanarratives’ (Lyotard (1984: xxiv)).Since post-modernism
downgrades the role of material relations,discourse becomes its main field.
Discourse is not simply ideology in its classical sense. AsPurvis & Hunt (1993)
accurately show, ideology refers to explanations more or lessgrounded on
material conditions; however inaccurate or fetishist there may be. Onthe
contrary, discourse – coming from the recent linguistic turn in social theory –
implies that language (and other forms of semiotics) not merely convey
socialexperience but constitute social subjects (their identities) and the
environment withinwhich they exist. Thus, discursive elements and the whole
variety of possibleinterplays between signifier and signified become the center of
attention. Nothing canexist without its discursive reflection; the signified is
inseparably bound to its signifier.Post-modernism’s favorite methodology is
deconstruction . The artificialuniversality of the grand narratives has to be torn
down by deconstructing it in itspartial, fragmented, contingent and possibly
conflicting discursive elements. Additionally, deconstruction questions even the
correspondence between signifier
1
General or grand theories analyze the whole spectrum, from the more abstract
lawsand concepts to the empirical analysis within a unified framework.and
signified since, as Derrida argues, these two categories are
nterchangeable.Therefore, any notion of causality is rejected and substituted with
Propositionalundecidability
(Platt (1989), Derrida (1981)
2). Deconstruction avoids anypropositional commitment because there are no
essential and causal determinationsrelating its objects of analysis to one another.
The result is a blatant relativism.It is informative how Platt (1989) attempts to
apply post-modernism in socialsciences. In order to substitute relations of
causality he borrows the term ‘recursion’from computer science. ‘Recursion’
refers to structures or networks which definethemselves in progressively simpler
terms. A recursive network is one in whichdistinctions of level can be made on the
basis of repeated self-referencingoperations. In such a system there exist
relations but without causality. Thisrelational but also indeterminate approach
gives a typical example of post-modernistrelativism.Finally, propositional
undecidability is coupled with methodologicalindividualism. Post-modernism
poses again the perennial structure-agency riddle andcompletely dismantles it:
there are no structures (even structural tendential laws andrelations) but only
agents that operate discursively. Any collective relations are short-term,
contingent, discursive constructions of groups of agents. Thus, in the beginningit
is the agent, the individual. Individuals through mimesis, repetition and
habitscreate social environments (although post-modernism is suspicious of the
veryconcept of society).When this comes to history it recourses to historical
relativism (see Raulet(1989): 160). History is a chance outcome in which personalities have
an overarchingimportance (this is evident in Meuret’s genealogy of Political
Economy that isanalyzed in the last part of this paper). Anderson (1988) argued
that this leads to a randomization of history.

In a similar vein, Wood (1995: 5-6) states that post-modernism studies ‘historic
change without history’:There is no such thing as a social system (e.g. the
capitalist system) with itsown systemic unity and ‘laws of motion’. There are only
many different kindsof power, oppression, identity and ‘discourse’. Not only do
we have to rejectthe old ‘grand narratives’, like Enlightenment concepts of
progress, we haveto give up any idea of intelligible historical process and
causality, and with it,evidently, any idea of ‘making history’. There are no
structured processesaccessible to human knowledge (or, it must be supposed, to
human action).
2
Derrida (1981: 219), following Godel, defines as undecidable ‘a proposition
which,given a set of axioms governing a multiplicity, is neither an analytical nor
deductive There are only anarchic, disconnected and inexplicable
Differences . For thefirst time, we have what appears to be a contradiction in
terms: a theory of epochal change based on a denial of history.Callinicos (1985),
taking as criterion their method of theorizing discourse,distinguishes two major
post-modernist strands. The first, associated with Lyotard,draws heavily on a
version of analytical philosophy of language (speech-act theory).The second
strand is post-structuralism, which is itself divided into two sub-strands.On the
one hand, there is Derrida's textualism (a true heir of German classicalidealism)
which denies the possibility of ever escaping the discursive; discourse hasno
extra-discursive referents and encompasses all the aspects of reality. On theother
hand, Foucault, Deleuze and Guattari propose a version of ‘worldly post-
structuralism’, which, in contrast to Derrida's idealist theory, proposes an
articulationof the discursive and the non-discursive.It is basically ‘worldly post-
structuralism’ that operates as the springboard for the invasion of post-
modernism in the social sciences (economics included).‘Worldly post-
structuralism’ meets the post-structuralist and post-marxisttheories
3
of another strand deriving from Althusserian structuralism and amistreatment of
Gramsci’s work. The typical and most representative exemplificationof this strand
is provided by Laclau-Mouffe (1985). Wood (1986) and Geras (1987)have offered
accurate and scathing critiques of their theses. However, it is necessaryto point
out certain aspects of these theories that operate as their discrete links withpost-
modernism.To start with, the scapegoat of ‘essentialism’, especially in the form of
thesupposed Marxist economism, is once again ceremoniously thrown in the
fire.Consequently, structural relations, and especially class relations, are
purged,downgraded or relativized and, instead, discourse assumes explanatory
primacy.There are no such things as material and class positions and actions, but
onlydiscursively constructed ideas about them. As Wood (1986: 62) remarks:In
this, Laclau and Mouffe have followed the now familiar trajectory
fromstructuralism to post-structuralism - though they seem uncertain whether
thepost-structuralist dissolution of reality into discourse can be regarded as
ageneral law of history (as it were) or whether it is only in the modern age,
consequence of those axioms, nor in contradiction with them, neither true nor
false withrespect to those axioms’.
3

It should be noted that both Lyotard (explicitly) and more recently Derrida (with
his Spectres of Marx ) have advanced variants of post-marxism which however
have not asignificant impact in social sciences in general and in economics in
particular.and particularly with the advent of ‘industrial society’, that social reality
hasdematerialized and become susceptible to discursive construction. Anderson
(1988: 40-55) has given a very lucid and accurate account of thelinks between
structuralism and post-structuralism. He delineates three major themesthat
established, in successive stages, the trajectory from structuralism to post-
structuralism. Firstly, the originating discipline from which structuralism drew
virtuallyall of its concepts, and then projected them to all areas of society, was
linguistics;leading, thus, to what Anderson terms as the exhortation of language
. Secondly,this absolutization of language led to the attenuation of truth
. The precariousbalance between the signifier and the signified, inherent in
structuralist linguistics,severed any possibility of truth as a correspondence of
propositions to reality. This, inreturn, implied a critical weakening of the status of
causality. ‘Causality, even whengranted admission, never acquires cogent
centrality on the terrain of structuralistanalysis’ (Anderson (1988: 50). The result
of this process was the randomization of history. Since causality is weakened, an
unbridgeable gulf exists between thegeneral laws and causes and the actual
events. So, there is the paradoxical resultthat a total initial determinism ends in
the reinstatement of an absolute finalcontingency. All these three major themes,
described by Anderson, lay at the heart of the notorious structure-subject riddle
and paved the way to post-structuralism. Ittakes only the unavoidable
questioning of the validity and the weight of the distinctionbetween signifier and
signified in order to detonate a chain reaction leading to post-structuralism. In a
nutshell, the way that structuralism formulated, and believed that ithad solved,
this riddle contained the seeds for a subsequent capsize into itsantithesis; post-
structuralism proper is born. As Wood (1985) has shown, this trajectory from
structuralism to post-structuralism has assumed flesh and bones in the journey of
certain intellectuals from Althusserianism to post-marxism. She accurately
identified Poulantzas as their forerunner. For these intellectuals the explanatory
primacy of discourse is based on the autonomization of ideology and politics from
the economy
. This issupplemented with the randomization of history and politics
. The first implies thatthe discursive elements cease to be determined, even in the
last instance (accordingto the Althusserian past of these writers), by the economy.
This is part and parcel of their anti-essentialist and anti-reductionist drive and
their quest for ‘openness’ and an‘unsutured’ theory. On the other hand, the
randomization of history and politics leadsto historicism. The result is an awkward
hybrid of (implicit) absolute determinism andabsolute contingency, with the
emphasis on the latter. Following their Althusserian

8structuralist past, Laclau-Mouffe theorize structures and laws in a rigid, static

andnon-dialectical way (worthy, indeed, of mechanistic determinism) which, in
return,enables them - but now under the new banner of post-structuralism -to
reject them infavor of the indeterminacy of the historically specific.
III. Post-modernism in Economics
It is only in the last decades that post-modernism made inroads in the field
of economics. This is not strange since it considers that the primacy of the
economy inthe study socio-economic relations is the basis of the essentialism and
economism of all the so-called modernist discourses (neo-classicism, Marxism
etc.).It is difficult to classify the post-modernist trends in economics because, in
asense, they are ‘post-modern’ themselves, i.e. quite different in origin, analysis
andscope. Screpanti (2000), from a post-modernist perspective, proposes
aclassification. He argues that all previous economic theories (classical, Marxist
andneo-classical) are modernist because they share the same assumptions:(a) a
humanist ontology, i.e. the conviction that economic science deals witha ‘rational
agent’ that is the active subject of social action. Neo-classicism proposesthe homo
economicus whereas Marxism the homo faber.(b) a substantialist theory of value,
i.e. behind the surface phenomenon of prices (an appearance in Marxist terms)
lays its hidden determinant, the values (anessence or substance). For neo-
classicism it is the subjective value of preferenceswhereas for Marxism and the
Classicals is the objective value of labor.© equilibrium analysis(d) a metanarrative of
humankind, i.e. a belief that the human subject is ableto lead reality towards a
logically conceived universal goal.For Screpanti all these can be summarized in the
twin original sin:determinism and essentialism. For him the best promise for the
reconstruction of economics lies with the various currents that comprise the
emerging post-moderngalaxy in economics. Their common foundation is the
rejection of this twin originalsin. He classifies as such neo-Austrians, the complex
systems approach, post-Keynesians but most prominently new institutionalism
and post-Marxism. It can easilybe discerned that his emphasis is on new
institutionalism, which appears to almostengulf every other current. Screpanti
explicitly disavows
neoclassical institutionalism
as exhibiting only limited post-modern inclinations. He argues that the new
radical institutionalism
is the product of works coming from Marxist, post-Keynesian andtraditional
institutionalist economics that reject the original ontological holism of their
raditions and merge towards a common new approach. Its basis is a new,
weakontology based on the observation of actual people, where individuals are
intentionalagents but with bounded rationality and institutions are artifacts that
simplify humanchoices and stabilize social relations.In a similar vein Garnett
(1999) argues for a post-modern revolution ineconomics based on a pluralistic
institutional-cum-marxist dialogue. The agenda of this dialogue is the rejection of
the Labor Theory of Value and its substitution by a‘social value’ which is founded
– following Mirowski’s (1991) institutional perspective – on contingent social
institutions (money, culture etc.).If there is something that surely needs
deconstruction this is Screpanti’sformulation. Being in a rush to create the agent
of his new – far more radical than thethree previous ones (the classical-Marxian,
the marginalist and the Keynesian) –revolution in economics he enlists trends that
are quite different even for a post-modernist. Some of the trends are rather
insignificant and act more as cosmeticfellow-travellers than as real ‘agents’. He is
also in a hurry to create the ‘enemy’.Therefore, he bundles together in his four
modernist criteria the Classicals, Marxismand neo-classicism irrespectively of their
unbridgeable differences.First, Marxism’s (and to a certain extent the Classicals’)
conception of sociallabor cannot be downgraded to a homo faber that is
homologous to the neo-classicalhomo economicus. Screpanti unjustifiably dresses
Marxism in neo-classicalindividualist clothes for his own convenience.
Furthermore, as it will be shown below,post-modernism has much more in
common with neoclassical individualism.Second, Marxism’s dialectics of form and
substance and its objective Labor Theory of Value have nothing in common with
neo-classicism’s contentlessabstractions and its subjective Utility Theory of Value
(see Mavroudeas (1999a)).Moreover, neo-classicism has long ago ceased to
employ value theory.Third, Screpanti’s critique of equilibrium is probably
appropriate for neo-classical general equilibrium models but is irrelevant for
Marxism’s use of equilibriumanalysis within the framework of dynamic models. It
is true that neo-classical modelsaim to produce order (stability) but this is totally
erroneous regarding Marxist modelswhich usually analyze crisis.Finally, Screpanti
ends up with a metanarrative of his own: post-moderneconomics as the more
radical endeavor in economic analysis that subverts thefallacies of its
precursors. A more balanced approach would reveal that there is a weak but
commonfoundation for various post-modernist currents in economics. This
consists in arejection (or radical weakening) of causality, a prioritization of
discourse and a rejection (or a radical weakening) of the notion of structure. This
is supplementedwith a recourse to either

methodological
or
institutional individualism
. Post-modernist inroads in economics may be grouped in three broad
theoreticalcategories:

(1) A middle-of-the-road trend, organized in the area of Radical PoliticalEconomy

around the remnants of some of the newer non-orthodox ‘middle-range’theories
4
(Regulation (Aglietta (1979), Lipietz (1983)), Flexible Specialization (Piore-Sabel
(1984)).(2) A current deriving from the Althusserian tradition (Amariglio-
Ruccio(1994), Callari-Cullenberg-Biewener (1994)).(3) A host of authors flowing
from the Keynesian, post-Keynesian,Institutionalist but also from heterodox neo-
classical trends (Samuels (1990, 1991),Mirowski(1991), McCloskey (1985), (Klamer
(1988), Weintraub (1991)).The newer non-orthodox ‘middle-range’ theoriesThis
current is usually disregarded in post-modernist classifications. Screpanti(2000:
105) fleetingly refers to it but for rather erroneous reasons. He enlists them
inpost-marxism – where they do not belong per se – and he praises their rejection
of stages theory – which is also wrong
5
.This host of theories is influenced mainly by ‘worldly post-structuralism’.
Itmaintains that a radical historical change has taken place and we live in a new
post-modern era of capitalism (post-Fordism, second industrial divide etc.).
Hence, post-modernist elements in its theory are the corollary of real changes
rather than simply atheoretical perspective. Its links to post-modernism pass
through post-structuralismand post-marxism
6
.These theories want to distance themselves from structuralism (which, in thecase
of Regulation, was its initial referent) and give agents more freedom. This isclosely
related to how they theorize the relation between economy, politics andideology.
They exhibit a gradual trajectory from an initial mild structuralism towardspost-
structuralism and ultimately post-modernism. In addition, conceptual relativism,
4
‘Middle-range’ theories rejects abstract general laws and the necessity of a
generaltheory which it substitutes with intermediate concepts with an almost
immediate identificationwith the most concrete phenomena or with empirical
observations believed to be so (stylised‘facts’).The newer non-orthodox ‘middle-
range’ theories are a group of theories thatdominated Radical Political Economy
after the 1970s. Prominent among them are Regulation,the American Social
Structures of Accumulation and the Flexible Specialisation thesis (seeMavroudeas
(1999a)).

5
For a critique of Regulation’s theory of periodization see Mavroudeas (1999b).

6
For an analysis of Regulation’s relation to post-modernism see Mavroudeas
(1999a).

11multi-causality and eclecticism crept in and ultimately conquered their

analysis.Finally, new institutionalism becomes – implicitly in the beginning
explicitly later on –a major source of inspiration.There is extensive recognition of
their relation to post-modernism. Lash(1990), proposing a political economy of
post-modernism, believes that a ‘regime of signification’ is co-articulated with a
‘regime of accumulation’ (one of Regulation’smajor concepts). On this basis, he
defines the new restructured form of capitalaccumulation as ‘post-fordism’ or
'disorganized capitalism’, which is characterized bya turn from mass production
and consumption to the services and informationeconomy, flexible production
and specialized consumption. With regard to the socialaspect, the working-class is
being shrunken and fragmented, resistance isapportioned to decentralized and
multi-collective (inter-class) social movements andindividualism returns.
Additionally, Lash argues that this new (post-fordist) regime of accumulation is
being transformed with accelerating rhythms to a regime of signification, because
both the means and the forces of production acquire anincreasingly cultural -
rather than strictly economic - hue. The forces of productionare no longer
mediated by the material means of production but constitute issues of discourse
and communication between management and workers. Lash suggeststhat the
widespread implementation of quality circles and team briefings are obviousand
undeniable proofs of this alleged transformation. For the informed reader it
isobvious that all these theoretical elements are loans from the Regulation
Approachand the Flexible Specialization theory. This account is supplemented
with referencesWilliamson’s neo-classical institutionalism of and Bell’s theory of
post-industrialsociety. Also, Laclau-Mouffe’s post-marxism in its solitary and
vague economicreferences invokes Regulation’s regimes of accumulation.This
does not mean that the newer non-orthodox ‘middle-range’ theoriesadhere heart
and soul to post-modernism and post-marxism. On the contrary, theyrepresent a
middle-of-the-road choice. In the regulationist tradition Lipietz introducesshyly
the concept of the Universe of Discursive and Political Representations as
acounterpart for the usual concepts of the Regime of Accumulation and the Mode
of Regulation. Aglietta - in his latest works - moves further to discard the
initialregulationist theory and to adopt Foucault’s theory of power, Baudrillard’s
historicalaccount and Girard’s methodology as his new framework.On the other
hand the Flexible Specialization theory adopts an even morerelativized, historicist
perspective and for this argues for its superiority againstRegulation (Hirst-Zeitlin
(1991)). Mass production and its flexible successor areaccidental historical
creations rather than inherent necessities of capitalism (Sabel-Zeitlin (1985)). The
saturation of mass standardized products’ markets led to achange in consumer
preferences and the creation of market niches based on qualitycharacteristics.
Additionally, the exhaustion of Fordist technical capabilities and thecrisis of the
1970s led to the re-emergence of flexible small-scale production. Thiscombination
is crystalized in the creation of a new technological paradigm based onflexible,
programmable machinery able to respond swiftly to demand changes, usingmulti-
skilled workers and in a context of co-operation and competition exemplified
bythe modern day neo-Marshallian industrial districts. The result is the new era
of Flexible Specialization. It is interesting that the sphere of consumption and
its‘liberation’ from supply-side constraints is considered the driving force of
thesedevelopments. Thus, true consumer-sovereignty is established and
furthermoreconsumer preferences are formed on the basis of status and
discursive elements.Curiously enough Baudrillard’s post-modernist theory of
consumption is not invoked.Post-Althusserian post-modernismThis current is
grouped around the

Rethinking Marxism
U.S. journal. It hascertain links with the British Althusserian branch around the
Economy & Society
journal, although the latter is closely associated with the Flexible
Specializationthesis (see Hirst-Zeitlin’s (1991) critique of Regulation and their
exclamation of thesuperiority of Flexible Specialization). For example, Amariglio-
Ruccio (1994) maintainthat their rejection of the ‘essentialism of the market’ -
that, according to them, can befound in both Marxism and Hayekian liberalism (and
indeed of many other types of essentialism as well) - is similar to that of Hindess
(1987).This current does not accept the notion of a post-modern epoch (contrary
toLaclau & Mouffe, who also stem from the Althusserian tradition). Amariglio-
Ruccio(1994) reject the identification of the character of the economic theory
with anycontemporary economic process
7
. Instead, they try to propose a version of post-modern Marxism as a general
theory. They criticize neo-classical, Keynesian andMarxist theories for their
common foundational axes, namely (a) order (strict causaldeterminism leading
ultimately to stability), (b) centering (assuming that the economicsubject is
rational), (c) certainty (closed theories with no room for uncertainty). Their post-
modern Marxism ascribes to the opposite poles (disorder, decentering
anduncertainty). They also reject Marx’s analysis of systemic laws and necessity
andsubstitute it with the indeterminacy of historical contingencies. This is coupled
withthe Althusserian theory of ideology and its methodology of
overdetermination. It is
7
Amariglio-Ruccio (1994: 9) dispute as unfounded and simplistic the
supposedemergence of ‘consumerism’.
ideology and, in the end, discourse (not material conditions) that provide the
socialdimension of agents. Then, overdetermination and the process-without-a-
subject isused to weaken any systemic causality and make socio-economic
processescontingent and uncertain. Particularly their use of overdetermination is
very similar toPlatt’s ‘recursion’: independent systems sit the one upon the other
and are mutuallyinfluenced without any causal primacy.This post-Althusserian
project of a post-modern Marxism is inherentlycontradictory. First, post-
modernism rejects general theory in principle and thiscannot be salvaged by
preaching that others can have their (post-modernist)theories. Additionally, its
Marxist character is rather a matter of personal aestheticpreferences than a
serious proposition. What kind of Marxism is this without areferential primacy to
material conditions and a dialectical materialist methodology?But its Althusserian
character is not also without problems. For example, it is notanswered
convincingly how can post-structuralism be truly reconciled with Althusserian
structuralist approach of a process without subject. It is true - as it hasalready
been explained - that latent links exist between the prima facie oppositetrends of
structuralism and post-structuralism. But this does not make the trajectoryfrom
the one to the other less contradictory. Finally, the Althusserian theory
of ideology was based on the theory of theoretical practice. According to the
latter thescientificity or truth of thought is judged by the purely internal criteria of
theoreticalpractice, not by its dialectical relationship to the concrete reality. The
result of thisthesis is the crude counterposition of an empiricistically understood
reality and atheory riddled with scientism. In a way, the Althusserian purge of
dialectics and itssubstitution with a structuralist formalism ended up with a
version of the relationbetween reality and theory on the same lines with the
positivist dichotomy ‘model-realworld’. It is true, on the other hand, that at the
same time it opened the floodgates for subsequent positions which - while keeping the
separation between model and realworld - they questioned the objectivity of the
former and relativized even more itscontent. In the post-Althusserian post-
modernism not only theory is separated fromreality but also there are no
‘internal’ criteria for the judgment of scientific truth. But,although
Althusserianism opened these gates a lot of work is needed in order to passthem.
This was not Althusser’s doing but that of his epigones. Consequently,
theinvocation of Althusser as a ‘post-modern’ thinker (Ruccio (1991: 500)) is
rather exaggerated.Heterodox, Keynesian and Institutionalist post-modernists
Finally, there is a large host of writers stemming from traditions of theEconomics
who begin by questioning the objectivity of economic theory. In contrast,they
stress the social construction of theory as discourse, the decentering of
thesubject (i.e. multiple subject-positions exist) and that subjectivity is not prior
to butconstituted by systems of language, power and other social factors.
Therefore,scientific objects are always preinterpreted and science cannot be
separated fromrhetoric. Hence, value judgments cannot be purged from theory in
the way orthodoxEconomics - via the normative/positive economics distinction -
do. Finally, theyquestion the traditional scientific boundaries in the social
sciences.It seems that this diverse host of writers is quite close - although
withoutexplicit reference - to textualist post-modernism, in the sense that they
concentrateon discursive elements. Extra-discursive referents are not employed
or appear tohave almost no consequence.Their starting point is the social
construction of economic subjects. Assaultingneo-classical orthodoxy, they
maintain that economic theories are sociallyconstructed and non-value free. In
this way the purported neo-classical monopoly of truthfulness, impartiality and
objectivity is negated. On the contrary, many differenttheoretical perspectives
can exist within economic science, depending upon differentethical (value)
judgments. However, there are no specific criteria for judging thetruthfulness of
each theory. Additionally, the social construction of the subjects isequally
relativized and understood in mere political terms. Whereas Marxismrecognizes
the social construction of subjects but bases this construction upon thesocial
division of labor and the class structure, for post-modernists this ‘imperialism’of
the economic - and even more of the sphere of production - is
unacceptable.Instead, they choose more fluid, short-term and relativist referents
which enable theacclaimed openendedness and indeterminacy of their theory.
Post-modernistsoverride the scientific boundaries but without transforming their
interrelationship.‘Politics’ are added rather than organically linked to ‘economics’.
The only major change is that both are discursively understood. In the cases
where an extra-discursive is employed, this is usual a theory of power not
generated by materialsocio-economic relations (as in Marxism) but by the
inherent nature and desires of mankind (e.g. Foucault).Samuels (1996) provides a
representative account of this perspective. Although he does not reject the
importance of truth (o.p.p.114), he posits that thesocial construction of truth
leads to a multiplicity rather than homogeneity of truth(o.p.p.115). Therefore, all
epistemological, ontological and theoretical positions arefunctional with regard to
the reconstruction of extant reality. This reconstruction is

15almost solely a discursive matter. Hence, vast opportunities for selective

perceptionexist (o.p.p.117). These arguments hold even more forcefully in social
sciences,which are systems of belief and modes of discourse and not solely
epistemologicalphenomena (Samuels (1991: 516). The social construction of
knowledge-belief (thecontrol of language), in return, organizes the control of the
definition of reality.Consequently, it has an inexorable political nature (o.p.p.517).
It is indicative how heunderstands this political nature: it is when the mode of
discourse (i.e. selectiveperception) is combined with hierarchical social structures
(o.p.p.519). Theprioritization of the characteristic ‘hierarchical’ is telling. Politics
are understood asmere struggle for power and hierarchy. This struggle is
autonomized from theeconomy and even superimposed on the latter.
IV. Post-modernism and neo-classicism
Post-modernist inroads in economics coincide, broadly, with and a
movementwithin neo-classical economics to expand their field of application. This
movementhas been branded by Fine (2002) as
‘economics’ imperialism’
. He has shownconvincingly that during the recent decades neo-classicism moves
beyond itstraditional fields and invades previously no-go areas. This holds both
withineconomic theory (with neo-classicism making bold inroads in areas such
asdevelopment economics) and within social sciences in general (as
methodologicalindividualism and economics’ quantitative techniques are being
spread widely). Thecrux of this movement is that neo-classicism ceases to neglect
the social dimensionand attempts to tackle it from within its perspective. Indeed,
the reason for theincreasing success of economics’ imperialism is that it has
endogenized the social asnon-market responses to market imperfections. Social
aspects that were previouslyconsidered alien to neo-classical analysis (such as
institutions, habits, culturalphenomena etc.) are now analyzed by using the neo-
classical microeconomictoolbox. Beginning with human capital theory and
following with neoclassicalinstitutionalism, information economics etc. this
imperialism gained momentum.Neo-classical imperialism has possibly direct and
indirect relations with post-modernist inroads. Fine (2002) argues that the post-
modernist excesses (with isundue emphasis upon subjectivity and the neglect of
objectivity) created – as areaction – a reinvigoration of interest on the material
conditions (of which theeconomic is a crucial one); and neo-classicism is
exploiting this interest.In my opinion the picture is far more complex. Capitalism’s
structural crisis of the 1970s opened a prolonged period of restructuring.
However, after almost three decades of restructuring – and despite significant
gains by capital against labor – thesystem has not achieved yet a long-term
solution; let alone a new ‘golden age’. Muchof this inability is due to the
inefficiency of orthodox theory to tackle economicproblems as social problems.
Thus, neo-classicism’s imperialism is both a sign of strength and of weakness.
Orthodox theory, by moving into terra incognita, risks itsown cohesion as well as
opening dangerous floodgates. By recognizing the socialdimension of the economy –
even in a distorted microeconomic form – and by notbeing able to offer a relevant
macroeconomic policy that could alleviate socialproblems it flirts with
troubles.Post-modernist economics revolve around the issue of the social
dimension.However, the way they treat it lead them not to be a challenger to
neo-classicism butrather a shy interlocutor. Here it should be pointed out that
post-modernisteconomics – with the exception of the newer ‘middle-range’
theories - are alatecomer (compared with their intellectual cousins in other fields)
and thus theyrather follow the neo-classical onslaught.Marxist Political Economy
considers socio-economic relations as anunseparable whole, which in bourgeois
society is being fetishistically separated in thespheres of economics and politics.
Within this unseparable whole social relationssecuring the creation of social
wealth and the material reproduction of society (i.e.the moment of production
and its subsequent moments of circulation/exchange anddistribution) have a
determining primacy over non-productive spheres of socialactivities. However,
the latter exert feedback influences of the former. From thistheoretical aspect,
the study of the socio-economic relations in production, exchangeand distribution
constitute the basis on which the study of the rest of the socio-economic relations
(ideological, political etc.) should be studied. Thus, Marxismstudies economic
relations in direct but also structured connection to social andpolitical relations.
The same holds – but in a weaker form - for the Classical PoliticalEconomy of
Smith and Ricardo, since it studies economic relations as socialrelations.On the
contrary, neo-classicism separates artificially ‘economic’ relations fromsocial and
political relations. It considers as ‘economic’ relations primarily thoseactivities
that arise in exchange (i.e. market relations). Then, these ‘economic’relations are
being considered the basis of the social and political relations - whichare being
studied by other separate scientific branches.Post-modernism conflates unjustly
those two opposing perspectives under the common accusation of economism.
Moreover, he trumpets a discursiveconception of the social dimension which has
little or no relation to material conditions. This, as it has been shown, is a weak
understanding of the socialdimension which cannot problematize seriously the
neo-classical version. In factpost-modernist economics have several covert links
with their neo-classicalcounterpart.First, curiously enough, they both consider
theory as not ‘the appropriation of reality by human thinking’ but as a mere
unrealistic simulation of reality. Neo-classicism focuses on his positive economics
and banishes normative economics tosome distant corner of economic analysis.
But its positive economics are studied viathe ‘as if’ methodology: theory is a mere
instrument for understanding and predictingreality but its tools are not realistic.
Thus, while assumptions can be decidedly falsethe explanation that follows can
be realistic (Friedman (1953)). Post-modernism, onthe other hand, considers all
theory normative (without any serious gearing onobjective conditions) and thus
makes it a subjective discursive narrative about theeconomy. Neo-classicism
divorces artificially objectivity from subjectivity and exilesthe latter, whereas
post-modernism artificially conflates the objective with thesubjective - and in its
more extreme versions it rejects even the existence of theformer -and attributes
primacy to the latter. They both end up with non-realist theory.Second, individualism
is the vehicle through which both organize their theories. Neo-classicism ascribes
explicitly to methodological individualism. Manyphilosophical post-modernist
theories also resort explicitly to methodologicalindividualism, as already
explained. However, the majority of post-modernisteconomics use a middle-of-
the-road version:

institutional individualism
(Agassi(1975), Boland (1982)). The institutionalist inclination of most of them
certainlyfacilitates this adoption. This version of individualism departs from
typicalmethodological individualism who claimed that all social phenomena are simply
thesum of the actions of the individual agents that operate in the society. It
recognizesthat institutions and society also affect an individual’s actions.
Individuals are thebasic analytical unit. On the other hand, institutions do have
something more thanbeing simply the sum of the actions of their constituent
individuals. However, there isno structural hierarchy in this interrelationship. It
cannot be, in principle, definedwhether individuals or institutions come first. In
each specific case there is a specialprocess of interaction that gives rise to it. To
put it in a different terminology, structureand agency affect each other
reciprocally without one being prior to the other – atleast in principle.Toboso
(2001), offering it as a truly middle way of explanation that can uniteboth
traditional and neoclassical institutionalists, summarizes it as follows:(1)
individuals are the main agents.

18(2) institutions exist and influence individuals.(3) change takes place via
individuals.The reciprocity-without-causality between structure and individual is
certainlysomething that sounds pleasantly to post-modernists. However, this
conception of institutions, habits and collective relations is at least ambiguous
and problematic. Itcannot define properly how all these arise since it cannot
propose a line of causality.In the last instance, everything hinges upon the
individual. Therefore, it is a versionof individualism and the classical critique of
this approach applies to it as well.Concluding, post-modernist economics –
instead of confronting neo-classicalorthodoxy – they actually abut on it in many
ways. It could be said that their rise is aside-effect of neo-classicism’s imperialism.
V. A political genealogy of Political Economy?
Meuret’s (1988) ‘Political genealogy of political economy’ is an
interestingattempt to propose a post-modernist interpretation of the birth and
the establishmentof Political Economy. Meuret's framework is based on a
combination of Foucault'stheory of knowledge (as a program of truth but without
calling into question its actualtruthfulness) and Annales’ economic historiography.
His main thesis is that PoliticalEconomy became the dominant discourse because
it constructed a better politicalframework for the co-existence of capital, state
and those trying to protectthemselves from their power. Thus, the reasons for the
emergence of PoliticalEconomy are to be found in the field of the political rather
than that of the economic.It is indicative that, for Meuret, the final crisis of the
ancien regime (the last stage of the feudal system) is caused mainly by political
reasons; and particularly politicalideological and discursive factors.Meuret begins his
essay by adopting Foucault’s ‘savoir’ and Veyne’s ‘programof truth’ perspective, within
which a theory is posited as a discourse autonomizedfrom and non-determined
by other spheres of social activities. Therefore, a particular theoretical discourse
should not lay claim to truthfulness. The very term genealogy,employed by
Meuret, denotes that his account of the construction and establishmentof
Political Economy does not pose the claim of truthfulness. Then the habitual post-
modernist jargon of discourse, representations, utterances, rhetoric (op.p.241)
etc. isemployed in his study. A major element of his analysis is the way in which
politicaltheories and economic representations are linked. He argues that
economic andpolitical representations stand on an equal par and they reciprocally
determine how

19men agree on a common perception of the world in order to inhabit it

together. Thequestion is why these - or only these two - fields of discursive
representations exist.His second theoretical pillar is his definitional framework
and the subsequenthistorical account of the evolution of modern societies. Both
these elements areadopted from the Annales school. He defines, following
Braudel, three major actors:capitalism, the state, and the public.Capitalism is
understood not as a mode of production (founded on the privateownership of the
means of production and the subsequent transformation of labor-power to a
commodity) but as that economic organization in which the
indispensableexchange of necessary commodities is organized on the basis of the
very minimumof necessary regulations (o.p.p.227). Capitalism’s actors are all
those - merchants,industrialists, landowners - ‘who conduct themselves according
to its rules, who playits game’ (o.p.p.227). This definition of capitalism confines it
to a mere mode of exchange relations (market). This understanding has critical
consequences inMeuret’s analysis. Additionally, there is nothing to explain why
these three figures(who correspond to the three of the four basic fractions of
capital - merchant,industrial, landowning, money capital - are his sole actors.
Then, the economy isdefined as ‘sometimes all the exchanges of a given society,
sometimes that partwhich remains outside the capitalist game’ (o.p.p.227). Again
here the economyappears mainly as an organization of exchange. If there are any
non-capitalist (non-market) - in Meuret’s terms - elements, these cannot be
explained, since theeconomy is confined to exchange relations and production is
absent.Then the state is taken as an almost self-defined concept. This
conception,also, fails to grasp the state as a derivative of the socio-economic
organization andnot as a primary agent. Consequently, it fails also to understand
the changes in thenature of state from one socio-economic system to the other.
In his analysis Meuretcannot distinguish between the absolutist state of the last
era of feudalism and thecapitalist state.Finally, the public is defined as ‘all citizens
with the power to repudiate thestate to the extent that they exercise this
power... It is not a sociological but a politicalreality: a set of opinions, attitudes
and propositions, of tacit resistances andacceptances which do or do not allow a
governmental apparatus to function’(o.p.p.228). Again this term is highly
problematic. The notion of citizen has a differentcontent under different socio-
economic systems (e.g. in a slave-owning city-state, incapitalism). Furthermore, it
limits opinions and struggles only to those in relation tothe state. There are no
relations of struggle within the socio-economic structure,even if these are
considered of equal validity to those in relation to the state.

20Meuret’s definitions fail to understood politics and political power as a

trulysocial process. Additionally, he fails to relate them to the problem of
production anddistribution of social wealth. This failure derives from both the
neglect of the sphereof production (and the socio-economic relations of
production) and the subsequentrejection of the concept of social classes (defined
on the basis of these socio-economic relations of production). The result is a more
or less open recourse tomethodological individualism: ‘men agree on a way of perceiving
the world in order toinhabit it together, economically and politically’ (o.p.p.228).On
the other hand, his historical account of the development of modern(capitalist)
economies fails to distinguish rigorously from the preceding
ancien regime
and also cannot explain the conflictual process of development of capitalism
fromwithin this
regime
. A final point is necessary with regard to the adoption within Meuret’s post-
modernist account of the Annales’ historical and definitional framework. The
Annalesschool or the New French History dominated the French intellectual scene
for quite along time, since its emergence in 1929, and continues to have an
imposing presence.Its linkage to post-modernism sounds curious enough, since it
has been known for itsemphasis on structures rather than agents. It focuses on
the economic background of history, instead of the political events, and it pursues
an inter-disciplinary approach,transcending the boundaries between the scientific
branches. Especially Duby andBraudel emphasize the perennial character of the
heavy structures (‘structureslourdes’). The impact of these structures is expressed
through the norms levied ondaily life which confine the space of liberty allowed
for initiatives to individuals andgroups.However, the Annales passed through
several phases of evolution
8
. It is itssecond period, which begun after the 2nd WW. and revolved around
Braudel's works,that emphasizes structure. The theses of its first period
(expressed in the works of Bloch and Febvre) came under the attack of the then
predominant structuralism.Braudel answered this attack by incorporating part of
the structuralist project. Theconcept of structure was appropriated, if not as a
conceptual framework, at least as adescriptive notion. The structure was seen as
embodied in the beginning of the periodof long duration. In Braudel's (1969)
words, ‘historical structures are visible,detectable, and to a certain extent
measurable: duration is their measure’. Thus, therewas a shift to a historical
approach that privileged the long duration and underminedspecific events.
8
For a presentation and also a critique of the school of Annales, see Dosse (1986)

Meuret adopts from the Annales’ perspective (a) the interdisciplinary

frameworkand (b) its terminology. On the other hand, he discards their emphasis
on economicrelations and the structuralism of the second period.Based on the
above, Meuret advances his political genealogy because hemaintains that the reasons for
the emergence of Political Economy are to be found inthe field of the political. He
defines Political Economy as a discourse and, moreover,as the governmental
discourse of the modern world (o.p.p.227) because it was ableto construct a
superior political framework for the co-existence of capital, state andthose trying
to protect themselves from their power. Political Economy’s exemplaryversion is
found in A.Smith. However, Political Economy’s superiority over other discourses -
either in the field of Political Theory or in pre-classical economic theories- is not
based on its theoretical status only but it was crucially reinforced by aparticular
event, the industrial revolution (o.p.p.247). In this sense, the predominanceof
Political Economy over other discourses does not derive from its truthfulness
butfrom its programmatic value (as a prescription for actions) in relation to
externalevents. This is a clear-cut post-modernist argument, which however, fails
to explainwhy this crucial external referent - the industrial revolution - has taken
place. If thelatter was a necessary feature of capitalism - as Marx thought - this
creates problemsto Meuret’s production-less understanding of capitalism.Meuret
proposes a four-phases periodization of the political genealogy of Political
Economy, which is founded on the relation between representations of
theeconomy and their congruence with the political system:(a) the period of
absolutism (till 1680), where the state is accepted as thelegitimate regulator of
market activities in order to guarantee people’s happiness andthe state
strength.(b) absolutism’s crisis of legitimacy of the state (18th century), which
isattributed to political reasons.(c) 18th century pre-classical search (Physiocrats
etc.) for a redefinition of therole and the legitimacy of the state.(d) A.Smith’s
solution as the discourse of Political Economy, in which thestate and market
relations are equally domesticated (in the sense that are mutualdefined on a
national (domestic) basis and the second operates with minimumregulations and
is the sole responsible for social wealth whereas the first shouldoverlook and
guarantee this function)
9
.
9
Meuret recognises correctly that for Smith the state has a role in the economy

This account is based on political and historically accidental factors plus

theprimacy of the discursive elements. The lack of any reference to classes and
socialrelations of production creates significant explanatory problems. For
example, theera of mercantilism - as the transition period when one element of
the feudal system(the state of absolute monarchy) allied with the precursors of
capitalism (merchantcapital) in order to overcome the feudal socio-economic
fragmentation - loses anysignificance. Equally, the construction of Political
Economy is confined merely to theredefinition of the role of the state and of the
modus operadi of market. Crucialelements of the Smithian theory, such as Value
theory, the role of the division of labor, the problem of the source of social wealth
appear to play no role. In thisunderstanding of Political Economy is highly
questionable if D.Ricardo - who isusually considered as the most coherent
representative of Political Economy andwho paid less attention to philosophical
and political problems and focused on aproduction-based Value theory - has any
place at all.In contrast to Meuret’s account, the Marxist approach - deriving the
evolutionof the science of economics from socio-economic developments and
founding themprimarily - but not exclusively - to the sphere of production
provides a better understanding of the emergence of Political Economy. More
specifically, it hasanswered convincingly – by retaining the emphasis on socio-
economic materialfactors - the following major questions: (a) why at a certain
historical epoch becamenecessary the construction of an autonomous science of
economic relations, (b) whyits first version took the form of Political Economy and
(c) why Political Economyretreated and Economics took its place as the dominant
version of a science of economic relations. In all its answers it is material reality
that indirectly and throughcomplex mediations that ultimately guided theoretical
developments.
VI. Conclusions
Post-modernist economics proclaim themselves as a newcomer thatconfronts all
previous ‘modernist’ economic traditions and offers a radically differentapproach.
They artificially lamp all their predecessors together and projectthemselves as
something entirely different: a true new revolution in economicthought, far more
radical than any previous one. In this paper it has been argued thatthis is a
grandiose declaration which cannot stand up to close scrutiny.Post-modernist
economics are rather a by-product of neo-classicism’sonslaught in economics but
also in social sciences in general. Instead of confrontingorthodoxy, they reproduce
many of its facets either covertly or as the opposite side of

23the same coin. Most notably, by overemphasizing the social dimension simply
asdiscourse and neglecting material conditions they help the neo-classical
bandwagonto establish further its dominance. In a sense, they assist neo-classical
domination inorder to act as its querulous critic; but there is no possibility of
overturning thisdomination. Moreover, the particular way in which post-
modernist economics theorizethe social – through their recourse to
institutionalist individualism – has significantaffinities with neo-classicism’s
imperialism. In the end, it is individuals – either from apost-modernist discursive
social subjectivity or form neo-classical institutionalistsocial subjectivity – that are
the primary agents.Consequently, post-modernist attempts to rewrite the history
of economictheory in general and the history of Political Economy in particular
are erroneous. Asit has been shown in the critique of Meuret’s political genealogy
of Political Economy,even ‘worldly post-structuralist’ approaches – let alone pure
textualism – cannotexplain satisfactorily Political Economy’s process of creation.
But also, moregenerally, contrary to Screpanti’s claim post-modernism does not
represent a radicalrupture in the evolution of economic theory. The big divide is
not between post-modernism and modernist economics but between Political
Economy (Classical andespecially Marxist) and neo-classical economics. Post-
modernist economics stand,at best, in the middle.
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Monthly Review
vol.47 no.3

Post-modern Theories of Management

The workforce in society today is different to the ones of the past, where different
methods had been put into practice. Modern organisation today would need to
address the diversity of people such as age, ethnicity, religion, gender and class
and also the stress that would be evident in the workforce. The essay will look at
the certain cases of diversity and causes of stress apparent in the organisation
and how the post modern theories of management such as workplace democracy,
and feminist theories have contributed to the organisation's solution in dealing
with the issues. Before delving into the post modern management theories and
examples, the idea of stress and diversity will be analysed and how post-modern
management can be an effective solution.

Pepper (1995) explains that in the workplace or at home, emotion of constantly

being challenged. Tension may co-exist in a supervisor and subordinate position
and conversation of confidential or personal matters may trigger emotions at
work. Areas of conflict in the organisation can exist in the organisation itself, the
department, boss, sub-cultural group, or individual colleagues. Emotions on
betrayal, dedication, anger, disappointment, hate or jealousy can be provoked.
With emotional behaviour, stress can also be a common factor in the workforce;
it is also increasing in modern life. The result of stress can lead to a burnout,
emotional and physical exhaustion, depersonalisation and lack of personal
accomplishment. Common stressors are dealing with the workload, quantitive
problems such as having too much work, staff shortage, and company downsizing.
Alternatively the problem could be qualitative; the work is too demanding,
unsuitable appointments, insufficient training, old equipment or poor
instructions. As well as stress in the work environment, the organisation cannot
forget stressful events employees may be dealing with at home.

Examples could include marriage problems, illness, pregnancy, moving house,

death or more. If not addressed, serious outcomes could be physical, such as
heart disease, insomnia, chronic pain, high blood pressure and psychological
effects could be a nervous breakdown, depression and extreme cases could be
even mental illness. Stress symptoms can affect the organisation by employees
loosing commitment, job satisfaction and becoming disenchanted with the
profession. Eventually, the employee may just decide to leave and it is in the best
interest of the company to ensure the workplace is not stressful and to monitor
working conditions which may lead to employees becoming stressed out (Pepper,
1995).

With the definition of stress discussed, the issue of diversity will be explored and
how it can also be linked to the cause of stress. Society today is full of diversity,
whether it is in gender, age, religion, ethnicity or social class. Looking in-depth at
gender, women have always held a stereotypical image as being illogical, fickle,
and incapable of thought and logic.

Frug (1992) recognises that gender is not naturally given but socially constructed,
and suggests one "principle" of postmodernism is that human experience is
located "inescapably within language." Power is implemented not only through
direct force, but also how language shapes and restricts realism. Yet language is
always open to re-interpretation, it can also be used to resist the shaping and
restrictions.

Robert Smith was born in New York in 1956. He has spent more than 12 years
working as a professor at New York University. He is always fond of helping
students with academic writing. Now he spends most of his time with his family
and shares his experience where to hire a highly qualified online term paper
writer and a professional onlineresearch paper writer.

Postmodernism and Information Management Theory

How postmodernism in business can change the way you manage

Inshore

You never thought when you entered your business that you would need to think
about Postmodernism and Information Management Theory, did you? Well,
welcome to this century! Many businesses are embracing postmodern economic
theory and postmodern theories of information management. Postmodernism
management involves breaking down the structured hierarchy and replacing it
with things like ambiguity, complexity, and diversity.

People often flock to Postmodernism and business because typically that's where
the innovation comes from. As a small business owner, you knew you had to think
outside the box to even start in business. Thinking beyond the "modern" norm is
a way of life for many pacesetters. It can change the way you manage your
business. Here are a few areas where postmodernism and information
management theory can come into play:

1. Organizational structure. Think outside the traditional hierarchical org

structure.

2. Marketing structure. Match your marketing strategies with postmodern

economics.

3. Thought leader change. Postmodern business strategy grows your business

outside of the box.
Connect with others to work out your postmodernism strategy in business

Postmodern management requires some thought, so it is best to look at other

companies or other businesses to see what they are doing. Connect with other
business owners or pull in a consultant who has experience in postmodern
management theory. Then develop your own from that. Find ways to incorporate
these theories department-by-department, or situation-by-situation.
Try: Join the PostModern Business Network community. There you will see top
stories and many resources to help you in your post modern quest. Sign up to
utilize the resources available there. Or you can bring in a consultant like
PostModern Enterprises who can help you work through postmodern growing
pains.

Take it to the next level of postmodern management theory

Go back and dust off your company's vision or mission statement. Then go
directly to the heart of what you want to do, in light of all you have read.
Try: Check out both HorseSenseAtWork.com and CIO for examples of utilizing
postmodernism in your business. In fact, HorseSenseAtWork provides an
enlightening table of business categories such as Planning, Leading, and
Organizing. Then outlines the difference between modern and postmodern for
each category.

Learn all you can about postmodernism and management philosophy

Knowledge is power. The more you learn which management theory is right for
you, the more focused your business will be.
Try: Purchase a book titled Postmodernism and Management: Pros, Cons, and
the Alternative to help you get started. Also, American Thinker can add to your
theory database.

Today’s managers must develop a more socio-economic oriented leadership

focus. The demand for graduates, trained with the capability of doing well in
multicultural environments, is far greater than the supply. Every manager and
policy maker in business or government and its public sector organizations has to
deal with multiple culture stakeholders-- who may be either workers or
consumers. Taught by Dr. V. H. Manek Kirpalani and Dr. Leif Olsen, this program
qualifies you to understand and successfully work in cross-cultural environments.
The Post Modern Management Masters Program™

The Background

The P2M Masters Program™ has one overarching objective: Making managers
more effective and efficient in today’s increasingly multicultural world. Today’s
managers must develop a more socio-economic oriented leadership focus. The
demand for graduates, trained with the capability of doing well in multicultural
environments, is far greater than the supply.

Multiculturalism is growing by leaps and bounds due to three driving forces:

 Increased Communication Speed and the Internet Highway.

 Emigration and Immigration.
 Multinational Enterprises with their explosive expansions.

The rationale for the growth of these driving forces and the environment they
create is addressed by this Degree Track. Almost all educators agree that the
quality of education relevant to business and other social disciplines must be
'learning oriented' - rather than just teaching oriented.

Although the move towards the former is still fairly slow in many educational
systems; it is nevertheless under way. Snapshot courses are no longer enough.
One must go deeper and develop knowledge and thorough understanding of the
subjects being learned. Every manager and policy maker in business or
government and its public sector organizations has to deal with multiple culture
stakeholders-- who may be either workers or consumers.

Further, the successful manager and/or business owner must embrace a broad
range of cross-cultural experience in order to promulgate success. This Masters
Program qualifies you to understand and successfully work in cross-cultural
environments.

The Rationale

Multinational Enterprises (MNEs) have been growing at some 8% a year in terms

of total revenues for the last 50 years or so. Globalization has led this growth.
International trade talks have aided the creation of a substantially large world
market for products and services. Other types of international cooperation have
helped speed up growth in previously stagnant economies by providing
investment and credit opportunities across the globe. Thus, the business
environment has encouraged the expansion of MNE products and services, and
facilitated the internationalization of production. The latter has allowed the MNEs
to produce and/or purchase many components from countries with lower costs of
production. Thus the MNEs have lowered their own costs and become even more
competitive. Today the total revenue of MNEs is greater than the GDP of any
country in the world, even greater than that of the USA which produces roughly
25% of the world’s GDP. Moreover the MNEs dominate world trade with a
roughly 60% overall share of this trade. The MNEs thus need the cross-cultural
expertise to produce and market their products and services in countries
worldwide, to deal with component suppliers from different cultures, and to
manage employees who come from diverse countries and cultures.

Emigration and immigration provide other driving forces that contribute to the
creation of diverse cross-cultural environments in many countries. The richer
North American and Western economies have served as a magnet to draw
immigration from all over the world. The USA and Canada have been importing
well over one million people a year as immigrants from overseas for the last 50
years. Further, today the USA has some 50 million Hispanic immigrants, legal and
illegal (the term for the latter is ‘undocumented’). The European Union has served
as a draw for immigrants from the colonies of its imperial countries. Furthermore
today it is seeing a strong flow of people from its Central and Eastern European
segments into its Western regions. Emigration from China and India has been
large over the last 100 years or so. All in all it is estimated that worldwide over
600 million people or some 10% of the world’s population are living in countries
outside their country of origin.

Increased communication speed and its constantly decreasing costs, coupled with
the Internet highway and the flow of information technology (IT), have supported
the above developments. This has been done by more direct communication
between head offices and subsidiaries, emigrants / immigrants and their original
home bases, and by the flow of global promotion of products and services, and of
global news via established outlets such as CNN and BBC World, as well as more
recent additions, such as Al Jazeera and Russia Today.

The affect of the driving forces mentioned above, and the consequent expansion
of ideas, has meant the growing demise of control through the systems in place,
whether it is a superior military system, a more efficient economic and/or legal
system, a more developed bureaucracy, or a combination of them all. Until
recently, the ruling elite, through such systems, could impose its view of what is
'good', and hence demand compliance from the populace.

The system was simply too complex for most individuals to impact.

As is the case with systems, including historical ones like Chinese and Roman
imperialism, European colonialism and Stalin's purges, there are not only
particular reasons for their emergence and respective staying power, but also
particular reasons for their eventual demise. What globalisation has brought with
it is a brutal increase in the speed with which systems reach their peak and
eventual demise. Cycles that used to be a matter of centuries now are a matter of
decades.

Information technology in particular has hastened this development, but also

other groundbreaking developments - such as DNA technology and the revival of
more holistic approaches – and has given rise to a range of competing ideas
waiting to be launched. Control over the minds of the populace is harder and
harder to gain and maintain, and the sheer multitude of parallel development will
make future efforts to enforce control relatively futile. The intellectual capital that
underpins this development is also--mainly because of the IT revolution--quickly
moving away from being the property of the elite to becoming the goods of the
common; even further lessening the possibility for the few to control the thinking
of the many.

If future professionals and academics, whether in business, governance or

technology, are to keep pace with today's (and even more so, tomorrow's)
development speed, a different approach must be instilled in people through the
educational system. The P2M™ Master’s Course is different from the MBA
concept in that the MBA represents a product of its time and environment, where
the bottom line ruled and specialization was the key.

The MPA, the public sector equivalent, is of a fairly similar construct.

The Multitudinal World and the P2M™

In a multitudinal world, where issues like sustainable development, shareholders'

value and ethnic-religious conflicts are all 'hot'-- corporate, technical, political
managers and professionals must become more able to see beyond their own
respective area of direct involvement and responsibility. Future leaders and
managers have a rapidly growing social responsibility to the society their
employing organization operates within - a task that current management training
programs tend to underestimate. An elective course or two on good governance
or socially responsible investments is unlikely to change the thinking deeply
enough, especially as they usually are electives rather than mandatory courses.

The objective of the P2M™ is to establish a Masters Program with a multi-cultural

base and a more socio-economic oriented leadership focus. A Rushmore Graduate
with such leadership training will be able to apply it in a scientific or social
environment, and/or in a corporate or political context. Leaders and managers
who understand their responsibility in the broadest meaning will also understand
that there is no contradiction between ROI and social responsibility. A good
example of this lies in the industrial tradition that built many of the companies
now considered backbones of the societies from which they emerged.

Had it not been for hardworking entrepreneurs with very long-term vision and
far-reaching social responsibilities, there would be no Ford Motor Co, no Sony
Corporation, no IKEA and no TSMC. Only leaders who can read both the social and
the financial sides of the socio-economic equation succeed, and this is the key
component of this Curriculum.

The P2M's Corner Stones and Underlying Logic

The P2M™ builds on three interrelated cornerstones, each one with an underlying
logic.

Corner Stone 1:

One must recognize that the multitude should be culture-sensitive, rather than
assuming a global westernized mono-culture such as many MBA programs tends
to do.

Underlying Logic:

The cultural issue will never go away, and multitude culture importance will
increase once countries like China, Korea and India gain fuller influence in global
matters.
Corner Stone 2:

Open the social platform, rather than viewing management as a limited task.

Underlying Logic:

The management of just about any entity, whether public or private, now affects
significantly larger circles of society than it used to do. The Internet, as well as
other open access platforms, has also dramatically increased the possibility for
information-sharing. This has allowed participative democracy representatives,
who for so long had mainly expressed their views and opinions through NGOs
and/or street rallies, the access to, and increasingly efficient use of, the kind of
information that was formerly controlled by 'the establishment.'

Corner Stone 3:

The program is future oriented, rather than business-as-usual.

Underlying Logic:

The speed of development in general, and technical development in particular, is

in-creasing, while current management systems and frameworks typically assume
more focus on present operations and quarterly report driven shareholder value
than on the future.

The P2M™ Objectives and Assumptions

The overall objective of this new Masters Program for managers across the
corporate, political and social spectra is to offer a curriculum with a leadership
focus that can be adjusted to the respective cultural and socio-economic
environment in which it is to be consumed.

The overall assumptions are:

(i) Business is, in a broader sense, a consequence of opportunities offered through

social interaction

(ii) In a global and multitudinal society, demand should drive supply, where the
former is the result of social interaction.
(iii) Production costs will continue to be critical, with differences in cost levels
around the world remaining a concern to many.

Future managers therefore must need good abilities to see different societies in
different lights. It once took an almost nationwide boycott of McDonalds'
hamburgers in India before McDonald executives realized that their products had
to be diversified for cultural reasons; righteous Hindus found it unacceptable to
eat beef. Nowadays all international fast food chains offer localized menus. The
2005/06 boycott of Danish products of any sort in many Muslim markets, as a
result of what came to be known as the 'Mohammed-cartoon incident', indicates
how important cultural understanding is in an increasingly global marketplace.
Managers who understand what makes 'other people tick' will be more successful
than those who assume that what works in one society also must work in
another. The same goes for social workers, politicians, and international officials,
such as those at the United Nations, WTO, World Bank and International
Monetary Fund.

For managers with social or political ambitions, such cultural sensitivity is already
a 'must'. Nevertheless it is rare to find evidence for development of this insight
when looking at the curricula offered by most business institutions. In those
curricula, often more usually politically correct views and opinions are stated as
facts, and power-struggles of the past are highlighted as key explanations for the
world we live in today.

The P2M™-idea is twofold. One, to train program participants how to navigate

through an increasingly complex cultural world. Two, to prepare them for the task
of re-structuring the systems - as well as the institutions these systems rely on.
Further, to do this in a way so that the multitudinal approach is reflected in the
systems that will emerge, and eventually also in the institutions that will follow.

The P2M™ Courses

This program emphasizes the post-modern need for a global horizon. The P2M
comprises 30 credits and consists of the following courses:

1. World Religions and Philosophies (4 Credits of 30)

Hinduism, Confucianism, Buddhism, Judaism, Christianity, Islam are the six major
religions that historically, as well as in terms of current affairs, have a global
impact. Metaphysics, Ethnocentrism, Relativism, Socio-biology, Individualism,
Collectivism, Utilitarianism and Pacifism are some philosophies that also, with
varying success influenced, or tried to influence, our societies over time. Analyze
at least three different accounts of each one of these religions and philosophies.
Then add to this a similar analysis of any religion and philosophy that you yourself
consider more or equally important (if any).

Identify in what way each one of them has influenced, and/or is influencing, the
world of today, striving to give a balanced assessment in terms of positive and
negative impact. Primary literature references are:

Author Title

Oriental Enlightenment - the Encounter between

Clark
Asian and Western Thought

Cottingham Western Philosophy - an Anthology

Edgar &
Key Concepts in Cultural Theory
Sedgwick

Leaman Key Concepts in Eastern Philosophy

In addition to these references you are requested to add at least two additional
sources for each religion and philosophy, out of which at least one shall be written
by an author from either:

(i) the society where you are yourself born or raised, written in your native
tongue, or

(ii) the society where you wish to apply the management abilities you are
currently working to develop, written in the native tongue of that society
(translated if you do not master that language).

Complete this course by writing a 6.000-word paper on how each

religion/philosophy can be - and/or have been - viewed; how they may link to
each other and how (if at all) you think they continue to retain impact on today's
world.
The analytical aspect of this paper is seen as more important than references to
names, years and specific events leading to the current status. Source-
identification required, and fair use rules apply. Intellectual property guidelines
are mandated.

2. World History as Viewed by the World's Major -isms (4 credits of 30):

Many ideas have grown so strong over time so they developed into social and/or
political systems, entirely governing the societies over which they wrestled
control. The most influential ones, here identified as "-isms", are listed below -
together with two examples of literature / sources arguing for or against their
more significant characteristics.

'-ism' Discuss the views of... with the views of...

Mao: The Quotations from

Feudalism Machiavelli: The Prince
Chairman Mao Tse-Tung

Smith: The Wealth of

Capitalism Marx: Das Kapital
Nations

Lenin: Imperialism; The

Imperialism Highest Stage of Hardt & Negri: The Empire
Capitalism

The 1648 Westphalia

Nationalism Winichakul: Siam Mapped
Peace Treaty

Kipling: The White Man's

Colonialism Said: Orientalism
Burden

Comte: A general view of Olsen: Traffic - A Book

Modernism
positivism About Culture

Rousseau: The Social Satha-Anand and True: The

Liberalism
Contract frontiers of nonviolence

US Constitution, First Bhargava et.al: Secularism

Secularism
Amendment
 and its Critics

The 1967 ASEAN

Declaration Levi & Nelken: The
Consensus corruption of politics and
The 1986 Single European the politics of corruption
Act

Appadurai: Disjuncture and

Post- Kuhn: Structure of
difference in the global
Modernism Scientific Revolutions
cultural economy

Fundamental- Khomeini: Islamic Fukuyama: The end of

ism Government history and the last man

Huntington: The clash of

Neo- Stiglitz: Globalization and
civiliza-tions and the
liberalism its Discontents
remaking of world order

Stiglitz: How to Make

Globalism Lal: In Praise of Empires
Globa-lisation Work

Painter: State capacity,

Governance- institu-tional reform and Tapscott & Williams:
ism changing Asian Wikinomics
governance

Couple each set of readings listed above with at least one source from either:

(i) the society where you are yourself born or raised, written in your native
tongue, or

(ii) the society where you wish to apply the management abilities you are
currently working to develop, written in the native tongue of that society
(translated if you do not master that language)

Complete this course by writing a 6.000-word paper on how each -ism can be,
and/or has been, viewed, how different -isms link to each other and how (if at all)
you think they continue to retain impact on today's world.
The analytical aspect of this paper is seen as more important than references to
names, years and specific events leading to the current status. Source-
identification required.

3. A Changing World: Ecology, Anthropology, Demography and Economic

Geography (4 credits out of 30):

Climate-change is only the most recent of many pressing issues showing how
interlinked are the studies and impacts of ecology, anthropology, demography
and economic geography. When the UN's Security Council finally took this issue
on in 2007, it simply confirmed what was already well known: migration - whether
caused by war, economic inequality or climate-change - is a serious cause for
concern, whereas millions of people are moving, and will continue to move, to
new localities, in turn affecting those millions of people who already live there.
And as there is little we can do to stop it in the short term, we must learn how to
adapt to it, and make good from the situation it creates. This requires leaders and
managers with the right abilities and a strong social sensitivity.

Complete this course by writing a 6.000-word paper on how ecology,

anthropology, demography and economic geography link to each other, and how
you can see them constituting a circle of influence.

The list of primary course-literature includes:

Discipline Authors Title

Townsend, Begon,
Ecology From Individuals to Ecosystems
Harper

Conformity and Conflict:

Spradley, McCurdy
Anthropology Readings in Cultural
(ed.)
Anthropology

Social Macrodynamics: Compact

Korotayev,
Demography Macromodels of the World
Khaltourina, Malkov,
System Growth

Economic
Dicken Global Shift: Reshaping the
Geography Global Economic Map in the
21st Century

In addition you are requested to add at least one source in each field, by an
author from either:

(i) the society where you are yourself born or raised, written in your native
tongue, or

(ii) the society where you wish to apply the management abilities you are
currently working to develop, written in the native tongue of that society
(translated if you do not master that language)

The analytical aspect of this paper is seen as more important than references to
names, years and specific events leading to the current status. Source-
identification required.

4. Future-Studies Related to Cross-Cultural Issues, incl. Social Research

Methodology (4 credits out of 30)

Future-studies related to cross-cultural issues can help predict developments and

prevent problems, assuming they build on a good methodological platform. This
course on future studies as a means to understand and influence the future
therefore also includes social research methodology.

Complete this course by writing a 6,000-word paper on how future studies related
to cross-cultural issues can help not only predict and prevent problems, but also
to pave the way for more positive developments, based on positive assumptions
about the future, as well as how relevant social research methodologies are
required to validate such studies. The list of primary course-literature includes:

Author Title

Foundations of Futures Studies: Human Science

Bell (preface) for a New Era: History, Purposes, Knowledge
(Volume 1)

Booth, Columb, The Craft of Research

Williams

May Social Research; Issues, Methods and Process

The Research Method Knowledge Base (On-

Trochim
line)

In addition you are requested to add at least two sources in each field, by an
author from either:

(i) the society where you are yourself born or raised, written in your native
tongue, or

(ii) the society where you wish to apply the management abilities you are
currently working to develop, written in the native tongue of that society
(translated if you do not master that language)

The analytical aspect of this paper is seen as more important than references to
names, years and specific events leading to the current status. Source-
identification required.

5. Cross-cultural / Interdisciplinary Interaction and Psychology (4 credits out of

30):

With globalization follows cultural interaction. There is very little evidence to say
that a homogeneous global culture will develop. It is more likely that the concept
of glocal - a mix of the two words global and local - will best describe the future
world order.

To understand and facilitate this development one must understand what

constitutes a culture, and how and why cultures clash. Cultures are, however, not
only social, they can also be religious, professional, disciplinary or otherwise. By
understanding the psychology and methodology of bridging cultures one can help
not only peoples from different parts of the world to co-habitate, but also
specialists from different disciplines to co-operate. Using such insights one can
also more easily understand how the world will develop, as development always
is a result of such co-habitation and co-operation. Predictions for the future can in
other words become more reliable.
Complete this course by writing a 6,000-word paper on how the medium term
(10-50 years) future may look, considering the effects you believe that corporate
and political globalisation, the technological development (IT) and e.g. climate
change has (and/or will have) on cross-cultural interaction and interdisciplinary
developments, world-wide as well as in your own particular region.

Primary literature reference for this course is "Traffic - A Book About Culture
(Olsen).

The list of additional literature references includes:

Author Title

Cook Morality and Cultural Differences

Culture’s consequences. International

Hofstede
differences in work-related values

Inda, Rosaldo The Anthropology of Globalisation

Personality and Person Perception Across

Lee, McCauley, Draguns
Cultures

Understanding Social Psychology Across

Smith, Bond, Kagitcibasi Cultures: Living and Working in a Changing
World

Triandis Individualism and Collectivism

You are also requested to add a minimum of two sources of your own choice on
social research methodology, by authors from either:

(i) the society where you are yourself born or raised, written in your native
tongue, or

(ii) the society where you wish to apply the management abilities you are
currently working to develop, written in the native tongue of that society
(translated if you do not master that language)
The analytical aspect of this paper is seen as more important than references to
names, years and specific events leading to the current status. Source-
identification required.

6. Thesis: Linking directly to a Chosen Elective (10 credits out of 30):

Submit a thesis (consisting of a minimum of 20,000 words) discussing one of the

four electives listed below, adopting one of the three orientations listed at the
end of this paragraph as the overall setting for your paper.

A thesis requires good analytical reasoning paralleled with an academically

adequate level of detail regarding existing research, methodology, literature
references, etc. Since this paper shall be written as an in-depth paper, partly
elaborating on issues discussed in your previous papers, many arguments put
forward in earlier papers may be reiterated here - if they are put in a new or
otherwise relevant context or scenario.

We recommend that you write this paper in a way so it can be taken onboard by
the target group you wish to influence with your ideas, in case you would like to
publish parts of it in the future.

A list of recommended literature references will be provided by your tutor, to

which you are requested to add at least two sources by authors from either of the
two societies:

(i) the society where you are yourself born or raised, written in your native
tongue, or

(ii) the society where you wish to apply the management abilities you are
currently working to develop, written in the native tongue of that society
(translated if you do not master that language)

The four electives are:

6.1 Capacity Building for Diverse Cultures, focusing on managing human capacity
creation and development, as well as evolutionary processes and technology
transfer on a micro as well as macro level. Discuss how to develop capacity
building over time, and how technology transfer can be facilitated in a world of
social and cultural differences.
6.2 Structures and Systems, analyzing how institution-building processes take
place; how they are managed and influenced, including not only the processes
aimed at developing a State's administrative and juridical bodies, but also those
developing capital markets and political - as well as multilateral - institutions.
Discuss how the concept of governance is affected not only by these processes
and their outcomes, but also by other and seemingly unrelated political, cultural
and social events taking place on a parallel.

6.3 Inter-Cultural Leadership, based on case research and -analysis techniques

(the past), scenario building and -analysis techniques (the future) and
communication theory and/or technology and negotiation techniques (the
present). Leadership is here defined as the role of guiding and/or leading
developments from point A to point B, where only a proper understanding of the
past and the present can encourage others to willingly move towards a joint
future. Discuss cultural aspects of leadership, and how the role of the leader have
changed - and will continue to change - as and when the world's different parts
get more and more culturally, socially and disciplinary exposed to each other.

6.4 Western-styled Corporate Philosophy; intended for those non-westerners

who wish to have a thorough introduction to western corporate philosophy and
behaviour. It is designed with those in mind who has a local (non-western)
education, but wishes to pursue a career in a western-owned MNE. It includes the
following components.

(i) Culture as a platform for 'Thinking', 'Acting' and 'Behaving'

(ii) The concept of 'Logic', including deductive versus inductive logic.

(iii) International Law and the concepts underpinning western-styled democracy,

incl. their corporate applications and descending HR models and approaches.

(iv) The concept of 'Strategy', including ten of its competing 'schools'.

(v) The 'Corporate Family-Tree' in a western corporate context

(vi) The concept of 'Corporate Culture', including the RED TRAIL for corporate
professionals, and the ADD FIRE approach for their managers

(vii) Organisational models and job descriptions

(viii) The twin concepts of Delegation and Feedback, and their links to the western
view on corruption

This elective's thesis would typically focus on similarities and differences between
your own cultural setting and the type of cultural setting that the western-styled
corporate philosophy (discussed under this elective) would assume. Discuss also
how your own cultural tradition can serve as a platform not only for a local
enterprise, but for an internationally viable business model. Further, identify
steps for how western MNEs can adapt to local conditions, not only in order to
respect cultural diversity, but also to better tap into markets that are culturally
sensitive.

The three 'orientations' to choose from as the overall setting for your thesis are:

(i) Human interaction in a technology driven world, and/or Technical

developments in a humanistic world

(ii) Corporate profitability in an environmentally fragile world, and/or

Environmental concerns in a financially driven world

(iii) Corporate development in a politicized world, and/or Political development in

a 'corporitized' world

P2M™ Major Professors

Professor V.H. Manek Kirpalani

Professor V.H. Manek Kirpalani is a widely recognized authority in the field of

international business and marketing. He was a member of the board of Directors
of the American Marketing Association, and head of their Global Marketing
Division. He is also a Distinguished Fellow of the Academy of Marketing Science
(one of 29) and author of over 135 publications. Currently Professor Kirpalani is
the Distinguished Visiting Professor of International Business, Helsinki School of
Economics, and Director of the Center for International Business Education and
Research (CIBER), College of Business, Bloomsburg University, Pennsylvania. He is
also Distinguished Professor Emeritus of Marketing and International Business at
Concordia University.

Associate Professor Leif Thomas Olsen

Rushmore Associate Professor Leif Thomas Olsen is a former management
consultant, with extensive experience from transitional and cross-cultural
environments. After completing two terms with the Swedish Trade Commission,
one in Japan and one in the USA, he worked for commercial, bilateral and
multilateral organizations. Assignments included Central Bank development
projects in Eastern Europe (Sida) and post-war Vietnam (World Bank). Dr. Olsen
is now living permanently in South East Asia. Currently in Thailand, his research
focus is on cultural influences on multilateral cooperation.

Post-modern portfolio theory[1] (or "PMPT") is an extension of the traditional

modern portfolio theory (“MPT”, which is an application of mean-variance
analysis or “MVA”). Both theories propose how rational investors should use
diversification to optimize their portfolios, and how a risky asset should be priced.

Contents

History

The term 'Post Modern Portfolio Theory (PMPT)' was created in 1991 by software
entrepreneurs Brian M. Rom and Kathleen Ferguson to differentiate the portfolio-
construction software developed by their company,Investment Technologies,
from those provided by the traditional Modern Portfolio Theory'. It first appeared
in the literature in1993 in an article by Rom and Ferguson in The Journal of
Performance Measurement. It combines the theoretical research of many authors
and has expanded over several decades as academics at universities in many
countries tested these theories to determine whether or not they had merit. The
essential difference between PMPT and the modern portfolio theory of
Markowitz and Sharpe (MPT) is that PMPT focuses on the return that must be
earned on the assets in a portfolio in order to meet some future payout. This
internal rate of return (IRR) is the link between assets and liabilities. PMPT
measures risk and reward relative to this IRR while MPT ignores this IRR and
measures risk as dispersion about the mean or average return. The result is
substantially different portfolio constructions.

Empirical investigations began in 1981 at the Pension Research Institute (PRI) at

San Francisco State University. Dr. Hal Forsey and Dr. Frank Sortino were trying to
apply Peter Fishburn’s theory published in 1977 to Pension Fund Management.
The result was an asset allocation model that PRI licensed Brian Rom to market in
1988. Mr. Rom heard someone at a conference use the term PMPT and began to
use the term to market PRI’s allocation model. Sortino and Steven Satchell at
Cambridge University co-authored the first book on PMPT. This was intended as a
graduate seminar text in portfolio management. A more recent book by Sortino
was written for practitioners. The first publication in a major journal was co-
authored by Sortino and Dr. Robert van der Meer, then at Shell Oil Netherlands.
The concept was popularized by numerous articles by Sortino in Pensions and
Investments magazine. Videos, books and papers on PMPT can be found at
http://www.sortinoia.com. Sortino’s current comments regarding PMPT are
found at http://pmpt.me. A blog for anyone to post comments is
http://groups.google.com/group/pmpt-dtr

Sortino claims the major contributors to the underlying theory are:

• Peter Fishburn at the University of Pennsylvania who developed the

mathematical equations for calculating downside risk and provided proofs that
the Markowitz model was a subset of a richer framework.

• Atchison & Brown at Cambridge University who developed the three parameter
lognormal distribution which was a more robust model of the pattern of returns
than the bell shaped distribution of MPT.

• Bradley Efron, Stanford University, who developed the bootstrap procedure for
better describing the nature of uncertainty in financial markets.

• William Sharpe at Stanford University who developed returns based style

analysis that allowed more accurate estimates of risk and return.

• Daniel Kahneman at Princeton & Amos Tversky at Stanford who pioneered the
field of Behavioral Finance which contests many of the findings of MPT.

Overview

Harry Markowitz laid the foundations of MPT, the greatest contribution of which
is the establishment of a formal risk/return framework for investment decision-
making. By defining investment risk in quantitative terms, Markowitz gave
investors a mathematical approach to asset-selection and portfolio management.
But there are important limitations to the original MPT formulation.
Two major limitations of MPT are its assumptions that

1. the variance[2] of portfolio returns is the correct measure of investment

risk, and
2. the investment returns of all securities and portfolios can be adequately
represented by a joint elliptical distribution, such as the normal
distribution.

Stated another way, MPT is limited by measures of risk and return that do not
always represent the realities of the investment markets.

The assumption of an elliptical distribution is a major practical limitation, because

it is symmetrical. Using the variance (or its square root, the standard deviation)
implies that uncertainty about better-than-expected returns is just as disliked as
uncertainty about returns that are worse than expected. Furthermore, using the
elliptical distribution to model the pattern of investment returns makes
investment results with more upside than downside returns appear more risky
than arguably they really are, and the opposite for returns with a predominance
of downside returns. The result is that using traditional MPT techniques for
measuring investment portfolio construction and evaluation frequently distorts
investment reality.

It has long been recognized that investors typically do not view as risky those
returns above the minimum they must earn in order to achieve their investment
objectives. They believe that risk has to do with the bad outcomes (i.e., returns
below a required target), not the good outcomes (i.e., returns in excess of the
target) and that losses weigh more heavily than gains. This view has been noted
by researchers in finance, economics and psychology, including Sharpe (1964).
"Under certain conditions the MVA can be shown to lead to unsatisfactory
predictions of (investor) behavior. Markowitz suggests that a model based on the
semi variance would be preferable; in light of the formidable computational
problems, however, he bases his (MV) analysis on the mean and the standard
deviation[3]."

Recent advances in portfolio and financial theory, coupled with today’s increased
electronic computing power, have overcome these limitations. The resulting
expanded risk/return paradigm is known as Post-Modern Portfolio Theory, or
PMPT. Thus, MPT becomes nothing more than a special (symmetrical) case of
PMPT.

The Tools of PMPT

In 1987 The Pension Research Institute at San Francisco State University

developed the practical mathematical algorithms of PMPT that are in use today.
These methods provide a framework that recognizes investors’ preferences for
upside over downside volatility. At the same time, a more robust model for the
pattern of investment returns, the three-parameter lognormal distribution[4], was
introduced.

Downside risk

Downside risk (DR) is measured by target semi-deviation (the square root of

target semivariance) and is termed downside deviation. It is expressed in
percentages and therefore allows for rankings in the same way as standard
deviation.

An intuitive way to view downside risk is the annualized standard deviation of

returns below the target. Another is the square root of the probability-weighted
squared below-target returns. The squaring of the below-target returns has the
effect of penalizing failures at an exponential rate. This is consistent with
observations made on the behavior of individual decision-making under

where

d = downside deviation (commonly known in the financial community as

‘downside risk’). Note: By extension, d² = downside variance.

t = the annual target return, originally termed the minimum acceptable return, or
MAR.

r = the random variable representing the return for the distribution of annual
returns f(r),
f(r) = the three-parameter lognormal distribution

For the reasons provided below, this continuous formula is preferred over a
simpler discrete version that determines the standard deviation of below-target
periodic returns taken from the return series.

1. The continuous form permits all subsequent calculations to be made using

annual returns which is the natural way for investors to specify their investment
goals. The discrete form requires monthly returns for there to be sufficient data
points to make a meaningful calculation, which in turn requires converting the
annual target into a monthly target. This significantly affects the amount of risk
that is identified. For example, a goal of earning 1% in every month of one year
results in a greater risk than the seemingly equivalent goal of earning 12% in one
year.

2. A second reason for strongly preferring the continuous form to the discrete
form has been proposed by Sortino & Forsey (1996):

"Before we make an investment, we don't know what the outcome will be... After
the investment is made, and we want to measure its performance, all we know is
what the outcome was, not what it could have been. To cope with this
uncertainty, we assume that a reasonable estimate of the range of possible
returns, as well as the probabilities associated with estimation of those
returns...In statistical terms, the shape of [this] uncertainty is called a probability
distribution. In other words, looking at just the discrete monthly or annual values
does not tell the whole story."

Using the observed points to create a distribution is a staple of conventional

performance measurement. For example, monthly returns are used to calculate a
fund’s mean and standard deviation. Using these values and the properties of the
normal distribution, we can make statements such as the likelihood of losing
money (even though no negative returns may actually have been observed), or
the range within which two-thirds of all returns lies (even though the specific
returns identifying this range have not necessarily occurred). Our ability to make
these statements comes from the process of assuming the continuous form of the
normal distribution and certain of its well-known properties.

In PMPT an analogous process is followed:

 1. Observe the monthly returns,
2. Fit a distribution that permits asymmetry to the observations,
3. Annualize the monthly returns, making sure the shape characteristics of the
distribution are retained,
4. Apply integral calculus to the resultant distribution to calculate the
appropriate statistics.

Sortino ratio

The Sortino ratio measures returns adjusted for the target and downside risk. It is
defined as:

where

r = the annualized rate of return,

t = the target return,

d = downside risk.

The following table shows that this ratio is demonstrably superior to the
traditional Sharpe ratio as a means for ranking investment results. The table
shows risk-adjusted ratios for several major indexes using both Sortino and
Sharpe ratios. The data cover the five years 1992-1996 and are based on monthly
total returns. The Sortino ratio is calculated against a 9.0% target.

Index Sortino ratio Sharpe ratio

90-day T-bill -1.00 0.00

Lehman Aggregate -0.29 0.63

MSCI EAFE -0.05 0.30

Russell 2000 0.55 0.93

S&P 500 0.84 1.25

As an example of the different conclusions that can be drawn using these two
ratios, notice how the Lehman Aggregate and MSCI EAFE compare - the Lehman
ranks higher using the Sharpe ratio whereas EAFE ranks higher using the Sortino
ratio. In many cases, manager or index rankings will be different, depending on
the risk-adjusted measure used. These patterns will change again for different
values of t. For example, when t is close to the risk-free rate, the Sortino Ratio for
T-Bill’s will be higher than that for the S&P 500, while the Sharpe ratio remains
unchanged.

In March, 2008 researchers at the Queensland, Australia Investment Corporation

showed that for skewed return distributions, the Sortino ratio is superior to the
Sharpe ratio as a measure of portfolio risk.[5]

Volatility skewness

Volatility skewness is another portfolio-analysis statistic introduced by Rom and

Ferguson under the PMPT rubric. It measures the ratio of a distribution’s
percentage of total variance from returns above the mean, to the percentage of
the distribution’s total variance from returns below the mean. Thus, if a
distribution is symmetrical ( as in the normal case, as is assumed under MPT), it
has a volatility skewness of 1.00. Values greater than 1.00 indicate positive
skewness; values less than 1.00 indicate negative skewness. While closely
correlated with the traditional statistical measure of skewness (viz., the third
moment of a distribution), the authors of PMPT argue that their volatility
skewness measure has the advantage of being intuitively more understandable to
non-statisticians who are the primary practical users of these tools.

The importance of skewness lies in the fact that the more non-normal (i.e.,
skewed) a return series is, the more its true risk will be distorted by traditional
MPT measures such as the Sharpe ratio. Thus, with the recent advent of hedging
and derivative strategies, which are asymmetrical by design, MPT measures are
essentially useless, while PMPT is able to capture significantly more of the true
information contained in the returns under consideration. Many of the common
market indices and the returns of stock and bond mutual funds cannot
themselves always be assumed to be accurately represented by the normal
distribution.

Upside Downside Volatility

Index
Volatility(%) Volatility(%) skewness

Lehman
32.35 67.65 0.48
Aggregate

Russell 2000 37.19 62.81 0.59

S&P 500 38.63 61.37 0.63

90-day T-Bill 48.26 51.74 0.93

MSCI EAFE 54.67 45.33 1.21

Data: Monthly returns, January, 1991 through December, 1996.

Endnotes

1. ^ The earliest citation of the term 'Post-Modern Portfolio Theory' in the

literature appears in the article "Post-Modern Portfolio Theory Comes of
Age" by Brian M. Rom and Kathleen W. Ferguson, published in The Journal
of Investing, Winter, 1993. Summarized versions of this article have been
subsequently published in a number of other journals and websites.
2. ^ In MPT, the terms variance, variability, volatility and standard deviation
are used interchangeably to represent investment risk.
3. ^ See Sharpe [1964]. Markowitz recognized these limitations and proposed
downside risk (which he called "semivariance") as the preferred measure of
investment risk. The complex calculations and the limited computational
resources at his disposal, however, made practical implementations of
downside risk impossible. He therefore compromised and stayed with
variance.
4. ^ The three-parameter lognormal distribution is the only pdf that has thus
far been developed for robust solutions of downside risk calculations
permits both positive and negative skewness in return distributions. This is
 a more robust measure of portfolio returns than the normal distribution,
which requires that the upsides and downside tails of the distribution be
identical.
5. ^ "AJM - Abstracts". Agsm.edu.au. 2008-03-03. Retrieved 2010-05-08.
2. The Controversy Between Modernist and Postmodernist Views of
Management Science: Is a Synergy Possible?
3.
4.
5. Peter Engholm
6. Monash University, May 2001
7.
8.
9.
10. ABSTRACT:
11. This paper looks at the controversy between the modernist and

postmodernist paradigms in regard to management science and empirical

research. A fundamental belief in modernism is that all problems can be

solved rationally by the application of scientific and social theory, and thus

justifies management theories that aim to explain human behaviour.

Postmodernists argue that it is impossible to derive a ‘universal truth’, and

therefore empirical studies do not reflect the reality within organisations. It

is argued in this paper that despite the differences, it is possible to find a

synergy between the two paradigms. Management science does not have to

give in to postmodern assumptions, but can rather strengthen its validity by

taken into account postmodern ideas and suggestions.

12.
13. KEYWORDS:
14. Modernism, Postmodernism, Management, Social Science, Paradigms,
Organisations
15.
16. FULL TEXT:
17. This paper looks at two contrasting paradigms within the social sciences,
the modernist and the postmodernist paradigm, and their implications for
organisations and management theory. The modernist paradigm has since
the Enlightenment provided organisations with scientific theories and
methods, allowing managers to believe and put their trust in some
'universal truth' of how to best manage their workforce. In recent times,
however, the modernist paradigm seem to have failed to live up to
expectations, and alternative paradigms such as the postmodern paradigm,
have developed. The postmodern paradigm is almost a complete rejection
of modernist assumptions, especially the assumption that empirical
methods can be applied to find a universal 'truth'. Does this mean the end
of management science, and that theories about human behaviour and
motivation, for example, should be scrapped? It shall be argued that
despite their differences, it is possible to find a synergy between the
modernist and postmodernist paradigms, and that managers can benefit
from both views.
18.
19. Since the beginning of the Enlightenment, managers of industrial
organisations have enjoyed a relatively healthy relationship with the social
sciences, benefiting from a variety of modernist assumptions that gave
them methods to find the 'truths' of how to better manage their workforce
and become successful. Theories of motivation, needs, authority, control,
and so on, were developed through empirical research, applied, and
justified in the name of progress, reason, calculability and rationality.
Modernism believed in the essential capacity of humanity to perfect itself
through the power of rational thought, and its main purpose was twofold:
to develop a reasonably ‘true’ picture of the real world and to gain some
measure of control over the course of events in that world (Burrell and
 Cooper, 1988; Hoksbergen, 1994). For organisations, this meant that
science could provide the answers to casual relationships when the rise of
the modern industrial society led to demands for better and more efficient
ways of managing the workforce and the new technology. All that was
needed was the application of rational thought to an empirically accessible
reality (Björkegren, 1993; Beje, Gephart and Thatchenkery, 1996:2; Carter
and Jackson, 1993).
20.
21. The architect behind modernist thoughts was Descartes who argued that
"method" is the road to knowledge and truth. He contended that whatever
can be known must be proven by a rational, objective method (Hollinger,
1994). As previously mentioned, modernism is a product of the
Enlightenment, although it should be noted that modernism as a cultural
enterprise was split into divergent and often opposing intellectual and
moral tendencies, and was thus not a unified outlook in the white
Protestant bourgeoisie of early modern Europe. Nevertheless, the modern
quest for 'identity' was destined to find its expression in distinct social roles
and relationships within the productive structures of modern life (Dunn,
1998). It is associated with various social thinkers, among the most famous
being Kant, Saint-Simon, Comte and Weber.
22.
23. Comte, perhaps the first philosopher of organisation, saw the industrial
organisation as the source of human unity and progress (Dunn, 1998), but it
is Weber that has received most credit for his philosophy of the 'modern
organisation'. Weber's bureaucratic organisation is basic to the modernist
form of the effective industrial organisation. It is characterised by a
hierarchy of authority, specialisation and delimitation of work activities,
rules and regulations, rational calculability of decision-making,
concentration of the means of administration and separation of the
individual agent or member from the institution (Gephart, 1996). As noted
earlier, a fundamental belief in modernism is that all social problems can be
solved rationally by the application of scientific and social theory. Thus, the
'modern organisation' was assumed to utilise scientific methods to reach its
goals, these goals assumed to be the increase in efficiency and
 effectiveness of production and the enhancement of growth and
adaptability (Gephart, 1996), This would ensure the attainment of the
modernist principle of 'progress' and benefit both the individual and society
in the end.
24.
25. However, the idea of the Enlightenment that progress in science,
technology, art and politics would produce an enlightened and liberated
humanity, freed from the degradations of poverty, ignorance, and
despotism, remains not only unrealised but also increasingly questioned.
The 'progress' promised and enshrined within the modernist paradigm has
brought with it a series of new difficulties, such as high unemployment,
wealth gaps, environmental pollution, drug problems, globalisation,
poverty, and so on (Gephart, 1996; Smart, 2000). Recent protests against
globalisation by groups such as the S11, as well as various restrictive and
legislative actions taken against global corporations, indicate that the
modernist ideals have either failed to deliver or might not even posit a
correct view of reality and how to find 'truths'. Within organisations,
motivation is often given as an example of where modernist ideas have
failed to provide the 'truth'. Critics to the modernist paradigm also remind
us that the latest most comprehensive theory of motivation, Victor Vroom's
expectancy theory, was developed several decades ago and might not
identify the true sources of motivation today - if it ever did (Carter and
Jackson, 1993).
26.
27. Critics of the modernism paradigm also often point out that is was
developed for a western Protestant civilisation, and did not consider the
'other' world - that outside of Europe. Thus, modernist principles never
aimed to be universal in the sense that they could be applied to cultures
and societies that did not share the specific history of the West (Rudolph,
1996). Hence, globalisation inevitably meant the fall of true modernist
principles as corporations now faced the interaction with different cultures
that did not fit into the modernist paradigm with its assumptions of
rationality and legitimacy.
28.
29. The issues of truth and our access to it comprise one of the main
controversies of postmodern thought with its critical questioning, and often
outright rejection, of the ethnocentric rationalism championed by
modernism (Burrell and Cooper, 1988). The implications of this 'new
paradigm' for social and management theory could be huge, because most
postmodernists criticise the use of empirical methods for the development
of management theories purports to explain and predict human behaviour
and interaction.
30.
31. The next section of this paper briefly discusses some of the issues brought
up by postmodern writers in regard to management theory and control of
the workforce. By no means is this a thorough investigation into the
somewhat obfuscated, ambiguous and controversial subject matter, of
which even dedicated postmodernist writers struggle to make sense.
Rather, the discussion shall focus on some of the ideas of postmodernism
that might explain the problems with modernism and how a postmodern
worldview may assist managers in better understanding and managing the
workforce. That is, it shall be argued that it is possible not to view
modernism and postmodernism as two opposing paradigms, but rather as
two views describing two ways of looking at reality that need not conflict
with each other.
32.
33. Postmodernism developed out of a belief that the world is not accurately
described and interpreted by the modernist paradigm. It specifically
criticises the modernist's rather naïve view that there is a universal truth,
and that this truth can be discovered by scientific methods and applied in
all situations. It criticises modern assumptions about reason and rationality,
about normality and deviance and about the best ways of dealing with
practical issues of life and society (Hollinger, 1994; Boje, Gephart and
Thatchenkery, 1996:1).
34.
35. Hollinger notes that:
36.
37. Postmodernism invites us to rethink the notions of self, society,
community, reason, values, and history that dominate modernity, and to do
so without nostalgia or regret and without utopian aspirations for what we
create under conditions of postmodernity (Hollinger, 1994: 170).
38.
39. A number of social analysts have argued that the times in which we find
ourselves living are significantly different, and that in the transformed
circumstances we now encounter it is not enough to simply recycle
'cherished and time-honoured conceptions' (Smart, 2000). Perhaps the
justification for postmodernism can be found here, in the idea that existing
modern conceptions and analyses of social life have increasingly begun to
seem deficient and inappropriate, if not simply wrong. Modernist ideas
might have worked for the early and mid twentieth century social and
industrial society, but we now see a change of attitudes, of culture, and of
people's attitudes toward work and social life that necessitates another
understanding - a new understanding - of the world we now live in, and not
the world we know from history.
40.
41. This 'new' world is dominated by information, commodification, commodity
culture and consumerism (Hollinger, 1994). It is a world in which social
action can be seen as a 'language game' where participating actors make
various 'moves' according to recognised rules or external forces. As further
defined by Hassard (1993), we can only "know the world" through the
particular forms of discourse our language creates. These language games
are continually in flux, and can never be fully understood. The task is
therefore to recognise this elusive nature of language, but never with the
aim of creating a universal theory explaining all language forms. Human
action is thus seen to stem from drives beyond direct human control - a
notion sharply in contrast with modernism ideas (Burrell and Cooper,
1988).
42.
43. Another way of describing this 'reality' is to see organisations as clustered
political coalitions. Postmodernists argue that each organisation may
develop its own commitments, interests, linguistic codes, and values and
culture (Gephart, 1996). Individuals in these organisations therefore
become part of communities (or sub-cultures) that are distinct from the
world, learning the 'language' and codes specifically developed for these
communities. Each organisation can consist of many of these communities
of social interaction, where one can identify specific and different locus of
knowledge and power, allowing each community to decide what is
important and how to interpret reality as perceived by the members of that
particular community. For postmodernists, power is also a kind of social
production process through which collective meaning is created and
maintained. It is created and maintained in knowledge, and knowledge,
then, becomes an instrument of power that people use in making sense of
the world without fully grasping its implications (Feldman, 1999).
44.
45. Postmodern organisations are thus different from the traditional modern
bureaucracy where people were subject to rationally set rules of regulation
and hierarchical control. The 'new' postmodern organisation is one in which
highly qualified employees find themselves within culturally complex, but
flexible, production structures which are held together by information
technology networks (Hassard, 1993, 1996; Welge and Holtbrugge, 1999).
Hence, the idea of a superior, objective standpoint is rejected with the
emphasis being placed on the inherent instability of organisation. As argued
by Hassard (1996: 55), "the discourses of organisation are no more than
changing moves within a game that is never completed".
46.
47. What the discussion has tried to convey so far, is that organisations in
postmodern societies are not static entities that follow universal modernist
rules and notions of 'reality'. 'Reality' is constructed by each individual in
the organisation in the interplay between the individual and the individual's
local community or culture, between the community and the organisation,
and between the organisation and the rest of the world. Thus,
postmodernism is closely related to relationalist theory, which uses a
methodological strategy that aims at understanding conditions of
 possibility, rather than describing cause/effect relationships in
organisations (Gephart, 1996). Individuals in the postmodern society may
have some common traits that can be identified by scientific research, but
it is the continuous interaction with other individuals sharing a common
understanding of the reality (language) that shapes desires, beliefs and
actions within a particular organisational setting and the society to which
the individual belong. Thus, relational theory has implications for managers
as it suggests that managers do not control the fate of their decrees, but
instead, power is a matter of social interdependence. That is, we are
empowered only through the actions of others (Gephard, 1996; Hassard
and Parker, 1993).
48.
49. Burrell tries to summarise this issue by stating that:
50.
51. Postmodernism questions the relationship between real and
language. The real becomes replaced by the representational so that
we can no longer be sure that the ‘real’ exists outside of some group's
tendentious, ideologically motivated project (Burrell, 1993: 81).
52.
53. This is one key characteristics of postmodern thought: it rejects the concept
of a universal relation between forms of representation and an objective,
external world (Hassard, 1996). What this leads to within the postmodern
paradigm, is a quest for the local knowledge and insights from which to
develop the capacity for reflection and reflexivity in managers and
employees so that the chaos can be addressed, accepted, and, when
possible, controlled and managed (Boje, Gephart and Thatchenkery,
1996:1).
54.
55. In other words, within the modernist paradigm the whole organisation is
more valuable than the part. In postmodernism, the parts of the
organisation may be more valuable than the whole, because it is within
these parts that individuals develop their sense of reality through language,
symbols and interaction (Gephart, 1996). This reality, then, determines the
 individual employee's productivity and participation within the
organisation.
56.
57. What implication does this have for managers and management science?

One conclusion that can be drawn from the postmodern perspective is that

modernist assumptions about finding general, universal theories (or

'truths') of workforce management have failed to live up to their

expectations: they have simply not understood that each individual is

formed by a combination of interacting factors that continually changes the

individual's perceptions and views of reality (and self). If this is true of the

postmodern person, rationality and calculative reasoning cannot provide

feasible and effective solutions for control of the workforce. We would see

a shift from objective reality to subjective reality in which chaos is

inevitable and must be understood from a local rather from a universal

perspective. Hassard (1993) argues that the essence of theory is not its

database but its intelligibility: we should feel free to draw from the entire

repository of human potentials, not only be concerned with the social

relationships championed or discredited by particular theories, but also

with the potential for theories to offer new possibilities for our culture.

58.
59. What Hassard seems to suggest is a synergy of modernist and
postmodernist view of 'knowing the world', basing his view on the
assumption that both modernist and postmodern views have things to offer
in terms of ways of finding the 'truth'. Montuori and Purser (1996) similarly
argue for a need to think differently about the future and engage in an
ongoing process of learning/action that recognises the incomplete nature
of our knowledge. How then can a synergy of both modernist and
postmodern assumptions assist managers in today's and future
organisations in managing the workforce?
60.
61. We can summarise the discussion so far by recalling that modernist
organisational theory tends to seek a singular or best universal model of
effectiveness based on science, and that postmodern organisational theory
seeks a practical and ecologically viable set of images of effectiveness that
incorporates a range of views and concerns of different groups and
individuals (Boje, Gephart, Thatchenkery, 1996:1). These two views are not
necessarily conflicting, which shall be shown in the following section.
62.
63. The expectancy theory can be chosen as a good representation of the break
between modernist and postmodern theories. Expectancy theory states
that motivation is a function of individuals' desire for a particular outcome
and the perception of how likely a particular course of action is to achieve
that outcome (Carter and Jackson, 1993). A rationalist (modernist)
explanation of management would see it as a resource possessed of certain
techniques for the efficient achievement of particular goals. However, this
can not be achieved under a modernist assumption, as workers would have
to desire outcomes that managers could provide, and believe that they
were achievable by doing whatever management is willing to provide. This
is clearly impossible. Therefore, the expectancy theory signifies the
emergence of the pre-eminence of relativity over rationality, of the
subjective over the objective, and of the subjective order over objective
order (Carter and Jackson, 1993). It is a problematic theory for modernists,
as it explains motivation on a macro-level, but does not provide any
 information on how to deal with motivation on a micro-level, that is, on the
individual level. Thus, modernism provides the basis of how to deal with
motivation but cannot actually use the model in practice. Here,
postmodern thinking can elaborate on the macro-theory to make it more
valuable by incorporating micro-level issues such as influencing cultural
factors and the need to consider power relations and individual network
interactions that determine the individual's actual expectations.
Postmodernism also realise that expectations and desires of outcomes
continually changes through these interactions and individual
conceptualisations of 'reality'. Thus, expectancy theory, as a modernist
invention, can provide a general understanding of motivation, but is not
complete if postmodern focus on the individual, continuous 'chaos', and
patterns of language and symbols are not taken into account.
64.
65. Sinclair and Hogan (1996) also realise that there are questions for which the
standardised empirical methods of organisational science are not
appropriate and for which the postmodernist paradigm is appropriate, but
they carefully point out that the point is not which paradigm is the "winner"
of the debate. They argue that the effort ought not to be to reach
consensus on method or theory but on the set of relevant problems that
organisational science can solve. Although Feldman (1999) argues that
postmodernists assume all knowledge is power laden, and thus he distrust
all commitments to knowledge, it is not a valid interpretation of the
underlying assumptions of postmodernism. As has been discussed,
postmodernists criticises the assumption that scientific research reveals
some universal 'truth', but this does not mean that they are obliged to
reject some basic fundamental truth gained from empirical studies. The
option is always open for evaluation and discussion of scientific findings,
but they need to be carefully interpreted and not generalised to serve as a
universal 'truth'.
66.
67. Schultz and Hatch (1996) argue that postmodernism inspires interplay
between paradigms, discussing the importance of recognising patterns and
 orders within different cultures. They see users of both the modernist and
postmodernist paradigm conceive of culture as a set of ordered and
continuous relations between the visible and audible cultural
representations and underlying patterns of assumptions or meanings.
According to both paradigms, the organisational surface is never what it
seems but is always hiding a cultural essence, located at the invisible
depths of the organisation. The difference is that the modernist paradigm
studies the culture in a predefined and universal framework, while the
postmodernist paradigm studies considers culture as contextuality,
continually changing and evolving. Schultz and Hatch (1996) argue that it is
necessary to develop an empirical recognition of contrasts and connections
within the issue of culture, but that it is equally important to include
postmodernism's ability to "break the habits of organised routine and see
the world as though for the first time". Thus as interplay between
paradigms permits a more sophisticated approach to the analysis and
interpretation of empirical data.
68.
69. It would be difficult to see a future of postmodern organisations where
empirical research is completely discredited, and the argument that the
human agent is merely an agent responding to external influences is just as
inconceivable. This would probably lead to even more chaos in our society,
especially within large organisations. Giving management no instruments of
control would effectively lead to the elimination of any rational power
structures that would leave management as a "fleeting image of order and
control" and "a transparent myth" (Gephart, 1996: 41). Any hierarchies
would be dissolved and individuals are left within their sub-cultures or
networks to form an image of reality for themselves and act upon that
image. One (out of many) paradoxes of postmodern thought is that it
predicts the organisational system to be "anarchistically out of control by
humans" as well as the "death of the belief that individuals have power"
(Gephart, 1996: 41). At the same time, postmodernists foresee a future
where each individual is given more freedom to act and develop, no longer
 bound by rules and regulations, hierarchical relationships and other
traditional bureaucratic features.
70.
71. According to postmodernists, the 'future' postmodern organisation is
global, multi-cultural, network oriented, reactive, decentralised, and thrives
on a strong culture, information, knowledge and political (power)
relationships (Thompson, 1993). This is not a postmodern desire, but simply
a description of reality, of how organisations are moving away from the
modernist 'ideal' structure of an effective organisation. The postmodernist
paradigm acknowledges this change of nature, and proposes various
solutions for how to best understand the change, providing answers to
problems that modernism failed to consider. This does not mean that the
modernist paradigm should be rejected, nor does it mean that the
postmodernist paradigm should be accepted. What it does mean, is that
managers should recognise that there is 'no best way' to manage the
workforce, and changes in the society and environment necessitate them
to look for solutions from different perspectives.
72.
73. Thus, a synergy between the modernist and postmodernist paradigm is
possible, and this is what has been proposed in this paper. Management
can still rely on empirical methods for a broad understanding of the human
and organisational behaviour, but cannot simply rely on a universal 'truth'
for effective management. What the future holds for management and
management research is unclear, but it is evident that some transition
away from the modernist paradigm is going on. The postmodernist ideas
are still very ambiguous and controversial, and may not yet provide any real
answers to managerial issues. Until they do (if they do), managers are left
to 'cut and paste' from the different paradigms to ensure their
organisation's continued success and survival, and leave the 'big' issues for
sociologists to ponder about.
74.
75.
76. Any reproduction or distribution of this text is prohibited without express
permission by the author.
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Directionless Volatility

The two most noteworthy characteristics of markets in 2011 are these: first, they
have been more volatile for a longer stretch of time than ever before; and second,
they have gone essentially nowhere. The general pattern has been – up 1% one
day, down 2% the next, up 1.5% the next day and so on ad infinitum. The only
extended directional moves this year have largely cancelled each other out. In the
space of about eight trading days in late July and early August the S&P 500 fell
from 1345 to 1120, a drop of about 16%. In early October the index rallied from
1100 to 1285, an upsurge of over 14%. We would argue that both those events –
the August plunge and the October rally, were based on vapors rather than
substance – subjective mood rather than objective reasoning. The August plunge
came on the heels of the debt ceiling debacle, a self-inflicted problem on the part
of politicians for whom the art of governance is clearly a bar too high. Conversely,
the October rally was based on…what exactly? That Europe still exists? For the
moment, in any case, that rally appears to have been short-lived; a general
negative trend has characterized most of November thus far. Of course that could
always change again before year-end. Looking at the bar chart of the S&P 500 for
the past four months is like nothing as much as it is the path of a drunkard’s walk
– lurching from side to side but going nowhere.

Are volatility and directionlessness merely two sides of the same coin? We would
argue yes, and furthermore that they represent a – dare we even say the word –
rational pattern of trading for a capital market that seems to have completely lost
its bearings. Let’s start with directionlessness, which is perhaps the easier of the
two to explain. We can posit the question: what fundamental assumptions would
a directional trend be based on? The global economic picture is mixed. The
economy is not growing by much, but it is still growing. US GDP, although it was
again revised downward recently, is still around 2% based on the 3rd quarter
reading. That is not much to get excited about, and it does nothing to solve the
problem of persistent high unemployment and underemployment, but it is still
better than zero percent growth or a fall back into technical recession territory
(for those who are on the wrong end of that employment measure, of course, the
last recession never actually ended).

Tepid growth by itself might be enough to sustain a rally to the upside. Corporate
earnings, after all, have continued to do much better than top-line GDP numbers
because companies have figured out how to make more with less – lower labor
costs, higher investments of productive technology, access to growth markets in
Asia and elsewhere, and borrowing costs of next to nothing. Look at the
valuations for many blue chip stocks and you could convince yourself that they
are quite undervalued on an historical comparison. Why not take a little
directional position on an earnings-led path back to moderate growth?

Because of the Eurozone, that’s why. If the absence of negative growth provides a
floor below which equities prices appear reluctant to go, then the interminable
problems on the other side of the Atlantic supply the wet blanket that stifles any
attempt to soar with eagles. It was two years ago that the Athens stock exchange
started to tank while the rest of the world was enjoying the continuation of
recovery from the March 2009 market lows. Two years later and what do we
know? That the European common currency project is in dire straits, that
policymakers are absolutely frozen like so many deer in the headlights, that bond
investors are playing Russian roulette with some of the world’s largest national
economies – and the band plays on. There are policy decisions that could provide
relief from the intensity of the crisis in the short term, but the fact is that
Europeans still do not vote for technocrats – they vote for national politicians
based more on issues of local, regional or occasionally national importance than
on whether the ECB’s mandate should be redrawn to allow for wholesale bailouts
of Eurozone sovereign bondholders. This policy stasis could always change, but
for now it remains deadlocked.

So that’s directionlessness. Now we come to volatility. There is much that we did

not anticipate at the beginning of this year – bond yields falling to levels last seen
in the 1940s being perhaps the signature example. But what we saw that clearly
did come to pass was volatility – though the sheer magnitude and persistence of
this volatility day in and day out is less easy to comfortably explain. How is it that
the Dow Jones Industrial Average sees an intraday swing of less than 100 points
just one day in the entire period from September through the day before
Thanksgiving? Why has it become the “new normal” that the S&P 500 close up or
down by 2% or more on any given day? We know there is lots of uncertainty in
the market. The question is, why is there so much short-term trading around this
uncertainty every day? Is this a stock market or a casino?

The question does not permit a simple answer – many factors are at play in a
complex ecosystem from which emerge unforeseen properties. But there are
plenty of disturbing data points. Insider trading by politicians and by investors
with access to key policymakers means that information trades into those large
hedge funds with their servers backed up to the floor of the stock exchange, and
the computer algorithms operated by those funds spit out buy and sell orders,
and the rest of the world watches on in bafflement. For some reason this activity
(which has been chronicled by mainstream news sources over the course of this
fall) appears to fall outside the boundaries of illegal insider trading as defined by
the SEC. Why it is less “illegal” to trade on the knowledge of some upcoming
Operation Twist or QE3 (Fed decisions almost certain to move short-term
markets) than it is to trade on a tip by XYZ Company’s CFO about upcoming
earnings guidance is something that is frankly astounding and, given that it
appears to be standard operating procedure, more than just a little alarming. Stay
tuned for more of our thoughts on these developments in the coming weeks.

So much is afoot, and much is at stake. Rest assured that we are in the kayaks,
navigating the twists and turns. In the meantime, as we all prepare for the last-
minute bustle in preparation for the holiday, we wish each and every one of you a
happy Thanksgiving in the company of your loved ones.

It’s the same thing every day. Actually it starts before bedtime the night before.
Japan opens just about when we are sitting down to dinner here on the East
Coast. Hong Kong, Shanghai and other regional markets come on line shortly
after, and you can get a feel for how the next day is going to play out. Risk on or
risk off? You ponder the tea leaves in that final cup of chamomile before retiring
for the night. Up early in the morning, now we’re in the Eurozone. Anything new
on Greece or Italy? What’s with those rumors swirling around the ECB? Markets
all down by more than 2% – is Wall Street going to follow suit in a couple hours?
Maybe, maybe not – Ben Bernanke or China or some random quantum jitter may
alter the present reality. Oh look, Dow futures up by 100, even though FTSE is still
in the red. Of course that could all go into reverse at 3:30 pm when the high
frequency trading algorithms kick into fifth gear.

Trying to make sense of the markets’ daily ups and downs is a bit like viewing a
Salvador Dalí surrealist painting. You can come up with some interpretation based
on what you see, but a deeper objective meaning, such as it may be, is likely to
prove elusive.
The one and only constant is volatility. For the 28 trading days between August 2
and September 9 there were 19 days when the S&P 500 closed up or down by
more than 1% from its previous close. On 13 days – just under 50% of the time –
the change was 2% or more. There were six days in which the price move was 4%
or higher. Think about that. On six out of 28 days some combination of events
caused an instant revaluation of common stock prices by more than 4%. Now,
anyone apart from the most committed believers in the Efficient Market
Hypothesis understands that in the short and even in the intermediate term stock
prices can vary significantly from their fundamental value (which is simply a
present value notion for their prospective future free cash flows). But why so
much volatility, and why for so long? “Wild Market Swings are Becoming New
Standard” reads a headline in the New York Times on September 12. Volatility is
the new normal, it seems, a permanent part of the landscape.

On the face of it this perpetual volatility does not make sense. A reasonable
person can look at one of those 4% days and ask a seemingly straightforward
question. Did something happen today at Apple, or Cisco Systems, or Pfizer, that
makes their shares 4% more or less valuable today than yesterday? Now, once in
a blue moon the answer will be yes – something disastrous happens and becomes
public knowledge, like widespread product contamination or the abrupt
departure of the entire senior management team to a competitor. But mostly the
simple answer is no – the sales contracts are still in place, the factories are
humming along, the distribution channels are working as normal. Okay, fine, says
the reasonable person. Now I know enough about markets not to be surprised by
the odd hiccup – say a 2% move up or down once or twice a year. But if corporate
fundamentals are largely the same as they were earlier in the summer, why are
these no longer occasional hiccups but rather regular features?

We believe it can be summed up thus: the global economy is going through a

profound, far-reaching period of change. There is a higher level of risk baked into
the market environment as the full faith and credit of the world’s most developed
economies – the US, Western Europe and Japan – are less solid than they have
been for the past forty years. That is the canvas on which the daily price
movements trace their jerky trajectories. And it sheds some light on that mystery
of why Apple or Cisco is priced so much higher or lower on any given day. That
price – the price of a share of common stock – is nothing more than a single
number attempting to reflect what all the productive assets a company has at its
disposal – machines, people, patents, distribution networks etc. – can generate in
future cash flows, less the associated liabilities. If you feel very confident that the
world in ten or twenty years time will look a lot like the world today then you can
compute the value of those future cash flows with a commensurate level of
confidence. But if you think there is a high chance that future world will look
vastly and unpredictably different from today, your valuation of the company’s
stock price is much more uncertain, and much more likely to be affected by those
random jitters that move markets in the short term. Long term uncertainty does
have a direct effect on short-term price movements.

One thing reflected in those manic short-term gyrations is declining confidence in

the ability of today’s policymakers, or the institutions they represent, to improve
the long-term outlook. This is only partly a direct criticism of the policymakers and
institutions. It is also a tacit acceptance that the challenges they face are more
global than the organizational mandates that define and limit their policy choices.
Let us explain what we mean by that. Most of these institutions were established
decades ago (if not longer) under economic conditions where national economies
were truly national. The Fed was founded in 1914, the Bank of England well
before that. Production, capital and labor – the raw ingredients of the capitalist
system – were national (and capital was tethered to the fixed value of gold). In
1914 a US company that made shirts would buy its material from a US textile
company (that in turn would obtain most or all of its cotton from domestic farms),
borrow from a US bank to buy sewing and other equipment (also made in the US),
hire local workers to man the factory and sell to US stores that would in turn sell
the shirts to US customers. Whatever decisions policymakers took that affected
the textile and clothing industries there could be no doubt that these were
national industries, totally separate from those on other shores.

In the fall of 1907 J.P. Morgan – the man, not the institution – put up his own
funds to personally prevent a systemic financial collapse following a run on the
Knickerbocker Trust Company that created the Panic of 1907. He succeeded. But
the problems of today are far beyond the capacity of wise men (and women) to
bestride their white horses and rush to save the day. Some try – US Fed Chairman
Bernanke in particular has gone far outside the conventional box of Fed policy
tools to try and stabilize the system when it has approached the edge of the
abyss. Unfortunately with each successive attempt the results of these tools
become less impressive. QE2, the program initiated with much fanfare and
market enthusiasm last fall, did nothing to improve the unemployment rate,
nothing to improve business sentiment, and in fact inspired some collateral
damage by encouraging speculators back into commodities like oil, copper and
agricultural products where soaring prices negatively impacted middle class
household budgets. In a complex ecosystem like today’s markets the emergent
outcomes of specific policy decisions simply cannot be predicted with accuracy.

So what do we do? For one thing, learn to live with higher volatility, because it is
most likely not going away any time soon. For another, broaden our portfolios to
be better hedged against the dominant “risk on / risk off” paradigm, for example
through extending the range of “safe haven” exposures beyond the traditional
classes of high quality government bonds to include certain currencies and other
stores of value. Ironically, the longer this risk on / risk off pattern continues the
less risky the “on” trades will be and the more risky the “off” will be, relative to
each other. But with very low correlation between them they will offer a natural
hedge.

We should be very clear: the permanence of volatility does not necessarily mean
a prolonged bear market. It does not suggest that we pull everything out of the
market and stuff it under our mattresses. We expect there will be opportunities
and perils, as always. But the terrain will be trickier and the need for agility and
discipline more urgent than ever. We will continue exploring facets of this new
terrain in upcoming installments of this “Postmodern Finance” series.

The Postmodern Financial Crisis

Great economic crises like the one we are currently going through do not come
from just anywhere at any time; they are stuffed with history. They are crises of
the ethos of capitalism.

When Max Weber singled out Calvinism as the origin of modernity, he was wrong
to focus exclusively on the Protestant ethic but right to uncover a collective moral
commitment that stood behind market mechanisms.

With the war of 1914 to 1918, however, the careful, thrifty bourgeois gave way to
the panicking, spendthrift bourgeois. "The war has disclosed the possibility of
consumption to all and the vanity of abstinence to many," observed John
Maynard Keynes in 1920. "The laboring classes may be no longer willing to forgo
so largely, and the capitalist classes, no longer confident of the future, may seek
to enjoy more fully their liberties of consumption so long as they last."
Later, the rise of totalitarianisms black and red brought about the emergence of a
bourgeoisie conscious of its own finitude. Like the New Deal, the European idea of
a socially regulated market economy was a response to the threat, represented
by Hitler and Stalin, of the extinction of fundamental freedoms.

Then, with the collapse of Communism, a fourth evolution: the bourgeoisie for
whom saying is doing. The Berlin Wall had fallen--long live the new, reconciled
world! The new ethic left all fears and reproaches behind and embraced a
postmodern credo claiming that all devils were dead. The market economy has
always relativized goods by revealing their exchangeability and the "Good" by
tolerating its multiplicity.

But our age is the first to proclaim the power to reduce risk to zero simply by
spreading it around. It is the smiling reign of "positive thinking"--with ultimately
disastrous effects.

What led to the current crisis was not so much a faulty financial technique, but
the general state of mind that allowed its unchecked use. Capitalism, we should
have remembered, involves at once prudent regulation and the imprudent
transgression of old rules, the sharing of risks and the audacity to risk more
successfully than others.

Economic progress is not peaceful; it is always alternating between creation and

destruction, as old productive forces are left behind and new sources of wealth
explode. But after the end of the Cold War, the promise of a pacified world
seemed to announce the blessing of a postmodern history without challenges,
without conflict, without tragedy--a history in which you could get away with
anything. We are reaping the consequences of an excess of confidence, suffering
for lack of a Cassandra.

The speculative bubble was based on a bet that served as its own foundation. It
was "performative," in the terminology of the linguistic philosopher John Austin.
"This session is now open," proclaims the president in an assembly. It's true
because he says it. Here reality is based on speech, while in ordinary cases speech
is based on reality--that is, it is not performative but indicative.

Similarly, the financial bubble, piling credit on top of credit, got rich on self-
affirmation. It was contained in its self-relation, which is what made it a bubble. It
gradually eliminated the principle of reality: Nothing counted but the financial
products invented by people's investments.

The fantasy of omnipotence animated not only the trader but also those who let
him go his way; not only the heads of financial institutions, but the political,
academic and media authorities who saw no problem with any of it. Indeed, the
performative ideology--"It is true because we say it is"--has governed the
Westernization of the planet since the end of the Cold War: Because the enemy
camp disintegrated, the future belonged to us and all fundamental dangers
vanished.

Postmodernism, which places itself beyond good and evil, beyond true and false,
inhabits a cosmic bubble. It would be a good thing if fear of a universal crisis
allowed us to burst the mental bubble of postmodernism--if it washed away the
euphoria of our pious wishes and brought us once again to see straight.

That may be no more than another pious wish. But we should not succumb, as so
many did in the 1920s, to a catastrophic sensibility.

Yes, history is tragic, as Aeschylus and Sophocles knew. And yes, it is as stupid as
set forth in Aristophanes or Euripides. No roll of the dice and no act of God or of
mathematically refined finance can abolish chance, corruption or adversity; the
providence of the stock market cannot save us any more than that of the state.
Let these lines from Plato be inscribed at the entryway to future G-20 meetings:
"Is there not one true coin for which all things ought to be exchanged?--and that
is wisdom."

André Glucksmann is a French philosopher and author, most recently, with his son
Raphaël, of Mai 68 expliqué à Nicolas Sarkozy. This essay is adapted from the
Winter issue of City Journal.